Energy Bill [HL]
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Lord Marland)
My Lords, this Bill will bring energy efficiency into our buildings through the Green Deal, enhance our energy security and encourage investment in the next generation of low-carbon energy. The Bill also proposes to take powers to require the cheapest tariff information on energy bills, to create a new energy company obligation to reduce carbon emissions and to introduce new energy security measures to make sure that sufficient gas is available during an emergency and allow us to monitor the adequacy of our electricity supply.
Some provisions in the Bill extend to Scotland, Wales and Northern Ireland. We have worked closely with the Scottish, Welsh and Northern Ireland Governments in drafting the Bill, and we will continue to work closely with them on implementation by, for example, consulting devolved Ministers on secondary legislation so that we can get delivery across the UK.
The Energy Bill is only part of the picture. The consultation on electricity market reform published last week looks at carbon price support, feed-in tariffs, capacity payments and an emissions performance standard. The market reform will not only give us a stable and predictable market but put us on track to decarbonising the economy.
We need to improve energy efficiency and to reduce carbon emissions from existing buildings as well as build energy-efficient new ones. The Green Deal’s financial framework will let people install energy-saving measures to be paid for in instalments via energy bills. This is not a loan, so no individual is at risk of the lender calling in the whole amount. The meter is attached to the property and will stay with the property when the inhabitants change. There will be a golden rule that the instalment payment for the energy-saving measures should not be more than the expected cost savings on an average bill for the duration of the arrangement. Those costs can be spread over 25 years. The Bill also puts in place mechanisms to ensure the proper accreditation of measures and their installation and it will ensure wider protection for the consumer to guard against, for example, mis-selling.
The Green Deal offers the private rented sector a real incentive for both landlords and tenants alike. For example, the residential private rented sector has the largest proportion of band G properties of all tenures. In the non-residential sector, just over 60 per cent of properties are rented. Just under 18 per cent of registered non-residential buildings have an EPC rating of between F and G. Landlords will have no upfront capital costs to pay for their improvements. Tenants will repay the costs through their energy bill savings while enjoying lower bills.
After the Green Deal has been running for a year, there will be a review. If landlords as a whole do not take advantage of the Green Deal, we will not hesitate to enforce it through legislation. The Bill will give us powers to make landlords honour requests from their tenants to make their home energy-efficient where there is finance available through the Green Deal or the ECO. In addition, the worst-performing properties might be targeted through local authority-led action if the review confirms the need.
Complementing the Green Deal, we plan to replace the existing energy company obligations—the carbon emissions reduction target, CERT, and the community energy saving programme, CESP—with a new energy company obligation focusing on driving carbon savings and helping vulnerable energy households. When CESP and CERT expire at the end of 2012, a simpler ECO will work alongside the Green Deal to ensure that the Green Deal works for vulnerable people and supports heating improvements. The Green Deal will also support anyone in hard-to-treat housing.
Pensioner households benefit from a wide range of benefits, including the winter fuel payment of £250 for those up to 79 years old or £400 for those aged 80 or over. The cold weather payment of £25 per week is paid to vulnerable low-income households when the weather is really cold. In addition, we have announced the warm home discount to provide further support for the vulnerable.
The Green Deal will help reduce energy bills for the long term and make our houses more energy-efficient, but there is a wider issue of energy security. Fossil fuels are not infinitely available. Supply diversity and resilience are, of course, critical. Look at the past four winters, including the current one. We have 40 per cent of Europe’s wind energy and 11,000 kilometres of coastline at our disposal, but to reap those benefits we must connect wind turbines directly to the grid. The Bill proposes to amend provisions in the Energy Act 2004 and the Electricity Act 1989 to let us do that. The Bill will also help encourage new entrants to this sector and stimulate competition, innovation and the supply chain.
The Bill will also improve our security of gas supply by enabling Ofgem to strengthen commercial incentives on gas market participants to meet their contractual supply obligations during a gas supply emergency. In turn, this will sharpen incentives to avoid a gas supply emergency in the first place and help underpin commercial demand for additional gas supply infrastructure, for gas storage and import facilities and for long-term contracts. Our security is enhanced by using a mix of energy sources, so the Bill will cut the chances of external factors affecting our gas supply.
The Bill will also introduce a special administration regime for gas and electricity supply companies similar to that already in place for network and distribution companies. If, for example, a major supplier becomes insolvent, this Bill will ensure that customers continue to be supplied with gas and electricity as cost-effectively as possible until the company in difficulty is rescued or sold or its customers are transferred to other suppliers. This will reduce the risk of financial failure spreading across the energy market, maintain market stability and protect consumers.
To conclude, this Bill will bring energy efficiency to homes and businesses across the UK. For too long now, energy efficiency has been on the back burner, but it will now be at the forefront. The Bill will help protect the most vulnerable from fuel poverty and, importantly, bolster our security of supply. I look forward to hearing noble Lords’ advice and comments. I beg to move.
Lord Grantchester
My Lords, we have before us a very long and technical Bill, which is largely concerned with setting up the framework to implement the Green Deal initiative. As we have heard, other key energy policy areas in the Bill relate to, among others, security of energy supplies, access to up-stream petroleum infrastructure, a special administrative regime for energy supply companies, designations under the Continental Shelf Act 1964, licensing for offshore transmission and electricity distribution, the powers of the Coal Authority and repealing measures relating to home energy efficiency.
In the gracious Speech, this Bill was called the energy security and green economy Bill. As a result, we had originally expected to see proposals about the green investment bank and further energy security measures in the Bill. We understand that the policy detail in these areas is yet to be finalised, following the publication of the energy market reform White Paper, and that we can anticipate the Government bringing forward legislation on these areas next year. Does the Minister have any estimated timeframe for the introduction of that second energy Bill?
As my noble friend Lady Smith of Basildon expressed in previous debates and in our response to the energy Statement last Thursday, we on the opposition Benches support the aims of the Bill. We support energy efficiency measures that will help people to reduce their energy use. We all recognise the necessity of security of energy supplies and the challenge to reduce CO2 emissions in domestic properties.
Part 3 on low-carbon generation and Part 4 on the coal industry are not particularly controversial, although there are aspects on which we shall seek clarification. Part 5 repeals the Home Energy Conservation Act, the Private Member’s legislation sponsored by the noble Baroness, Lady Maddock. She can be proud of the fact that this Act has made a difference, despite some criticisms that have led to the proposed repeal. Therefore, it will come as no surprise that we support the principles underpinning the Green Deal initiative. Indeed, the essence of the scheme is the same as Labour’s pay-as-you-save proposals.
Customers will be able to get up-front money for energy efficiency measures in the form of a loan. The loan is attached to the property and paid back through the energy bill and not the individual. This means that when a person moves, the Green Deal payments do not follow them but stay with the property and are picked up by the next bill payer. It is suggested that the loan amount under the scheme would be up to £6,500. A key part of the proposal is that loans must meet the golden rule, which states that the cost of instalments must not exceed the projected savings on energy bills over the period of time of the finance arrangement. It could be up to 25 years.
Because energy consumers are intended to be the chief beneficiaries and bear the costs and liabilities for repaying Green Deal investments, we need to make sure that any measures are easy to adopt without compromising protection for consumers. We will be asking questions and tabling amendments to provide further protection for consumers. For example, what assurances can the Government give regarding interest rates and will interest be included in the proposed £6,500 cap? How will the Green Deal scheme sit with tenancy law?
We will look at amendments that require clearer disclosure and consent requirements for the benefit of the initial bill payer where the bill payer and the improver are different persons. At the moment, the Bill leaves too much up in the air in this area. The law needs to be clearer about what consumer protections are available and not left to the discretion of individual Ministers who may or may not decide to draft regulations.
The Green Deal proposals need to be seen alongside the Government's proposals in the Public Bodies Bill. As noble Lords may be aware, the Government intend to disband Consumer Focus, the energy consumer watchdog, and move the consumer enforcement functions of the Office of Fair Trading to trading standards. By doing this, the Government are weakening consumer rights to effective advocacy while putting more power in the hands of energy companies.
We support the aims of the Bill but, as mentioned earlier, it is lacking in detail. To this end, we hope that the Minister will be providing sufficient detail in Committee so that the House is able to take a view on how the Green Deal will actually work. For our part, we will spend the necessary time in Committee ensuring that the legislative scheme is well thought through, with the detail possibly becoming part of primary legislation. As I have already expressed, we will want to see consumer protection built into the Bill.
Good-quality consumer information is essential. The results from a recent Ofgem survey show that 70 per cent of energy customers find the number of energy tariffs on offer confusing, and over half of customers are not sure of the potential savings if they switch. On the other hand, independent research suggests that 70 per cent of consumers provided with energy efficiency advice take action as a result. At the moment, the Bill creates a system that relies on multiple lists: a list of approved Green Deal assessors; a list of measures that qualify for Green Deal funding; a list of approved products, such as specified types of double glazing and insulation that can be used in the home; a list of approved lenders; and a list of energy companies that will collect the Green Deal repayment. It is that time of year for this.
At this stage, we are not convinced that this process will be simple for consumers to follow, and we will continue to look at the scheme in detail to ensure that it is easily understood. If the Green Deal does not address consumer confidence, it will not work. This is in no one’s interests. We want it to work, and we will seek to amend the Bill to ensure this happens.
On a related point, we are concerned that this Bill does not provide adequate protection for those in the greatest fuel poverty. Labour’s Warm Front scheme insulated 2 million homes and provided assistance to many more people living in fuel poverty in private sector housing. The Government have announced their intention to phase out Warm Front funding, but there is likely to be a significant gap between the commencement of this Bill and the loss of Warm Front. The money has already run out and there is a waiting list. Warm Front is not just about home improvements but about the bigger question of improving the health of the nation, thus preventing real costs for the NHS and providing real savings. We will be questioning the Government about their intentions to relieve fuel poverty in the interim during one of the coldest winters. Let us remember we had already had snow in November this year, with a forecast that the situation is set to continue.
The Green Deal should work in tandem with the renewable heat initiative, which should help to lower the threshold requirements of positive savings and possibly provide encouragement for further energy efficiency measures above the least costly. To encourage ambitions towards the greatest energy efficiencies through implementing some of the more expensive energy efficiency measures, RHI income could be essential, leading to a reduction in the capital and running costs of any renewable heat installation, as less capacity is required. It would be a win-win situation.
On renewable electricity generating equipment, it is compelling to encourage householders to think of improving the energy efficiency performance of their homes at every opportunity. If the feed-in tariff engages their interest, it would be a wasted opportunity not to have the two policies working together, with once again the income stream assisting with the funding of efficiency measures. Further, if the generating equipment provides excess electricity above the needs of the property, any excess capacity can be exported to the grid. The inclusion of feed-in tariffs and renewable heat incentive technology may allow the golden rule of the Green Deal to work at more ambitious levels. Home owners who are not connected to the gas grid stand to benefit the most from installing renewable heat technologies since they will be protected from volatility in the price of fuel oil.
Among aspects in the administrative regime for energy supply companies, it is critical that the Government should provide certainty so that they can operate with confidence based on the assurance that consistency will be maintained. The electricity market reform consultation launched last Thursday, 16 December, is a critical component if companies are to invest to fill the energy gap. Can the Minister give reassurances today that the playing field will not be subject to constant realignments?
The Bill also provides an excellent opportunity to provide investment certainty in the power section by introducing an enabling power to introduce an emissions performance standard, with a requirement to act within a certain timeframe. Although it is not part of this Bill—yet already promised—we may need to look at this issue in Committee to reduce the delay.
Also not included in the Bill are any provisions in regard to deep geothermal. The Conservative-led Government have cut the previous Administration’s provisions for this and the remaining funding is now cut in half, leaving the industry on the sidelines here while it takes off across Europe. The industry needs licensing exploration legislation. Can the Minister give any indication today regarding the timing of any future energy Bill which could provide for this?
In conclusion, we on these Benches offer support to the Bill and will endeavour to provide constructive suggestions to improve the workings of this legislation. We wish it to be as effective as possible, as we look forward to taking the Minister’s place in the not-too-distant future during these unusually turbulent times. Happy Christmas, my Lords.
Lord Teverson
My Lords, one of the big issues in which I have been involved over the past 10 years concerns the water industry and the great amount of water leakage through our mains system. Water is a scarce resource and a significant proportion of it never reaches the consumer through the taps because it is dispersed through the ground. It is a great waste and we have made, and continue to make, a considerable investment to stop the leakage.
I see that as an equivalent challenge to the one that we now face in regard to heat and energy saving. Huge amounts of energy leak out into the atmosphere. The energy is not used for its right purpose—which is to keep us warm, to cook with, to manufacture with and all the other things for which it is needed. The Bill gives us an opportunity to plug the gaps in a number of ways. That is why I welcome it. Energy saving is often a less exciting area of energy policy—it is a Cinderella area—because it is not one of the new technologies and does not require billions of pounds of investment in shiny new machines. It is about the boring issue of making what we have work far better.
I also welcome the Bill because of the way in which it aims to tackle the scale of the problems involved. That could make a difference. Fourteen million homes need a degree of retro-fitting. Some of that has already taken place and there are a huge number of dwellings out there—a huge target population—that we need to make sure are fit for the future. The issue centres not only on energy security. The gap in energy generation that will occur in a few years time will require £250 billion of investment to fill, but, by encouraging greater energy efficiency, the Bill will allow us to reduce that future investment in the power sector. This will enable us to meet our targets under the Climate Change Act of an 80 per cent reduction in carbon emissions by 2050 and, more immediately, a 34 per cent reduction—or even a 40 per cent reduction—by 2020. We can do that only by having energy efficiency as a major part of our energy strategy, not only in the long term but in the short and medium term as well. I welcome the Bill and the fact that it has come early in the Government’s legislative programme.
However, a number of areas need greater explanation and perhaps tightening up. Also, in one or two areas, some additions are needed, which I think will be in the grain of what most noble Lords want the Bill to achieve. When I read the Bill through, one key area that did not convince me entirely was the part that relates to the rented sector. As the Minister stated, that sector includes properties that are the worst in terms of energy efficiency. It certainly contains true energy poverty, which is, regrettably, a growing problem in this nation. I am concerned that the Bill—perhaps the Minister can explain this when he sums up—seems to flag up that private landlords can go on hold and will not be put under pressure to do anything until 2015, some five years away. I know that there is some tough language in the Explanatory Notes and other DECC publications. All the same, saying categorically that the sector will not be kicked if it does not move for another five years is not what we want. I think that the date has to be brought forward and that greater pressure needs to be put on landlords to perform. I am delighted that the SME sector is not excluded from the Green Deal. The number of tenanted rather than owned properties is even greater in the business sector, so the Bill is important in that area, too.
As we move through Committee and other stages, I should like some assurances about what I would call conflicts of interest. I have some limited experience in financial services, where the Financial Services Authority is keen on the concept of treating the customer fairly. That is all about preventing mis-selling and making sure that there are no conflicts of interest in the financial supply chain. The structure proposed in the Bill, although the detail is not there yet, poses some risks, as we will have advisers, installers and the people who provide the finance. We know from consumer experience in the financial services sector that this structure can lead to market abuse, to the lack of Chinese walls and to mis-selling. If that starts to happen, households and small businesses will look at the Green Deal less positively than we would want. It is important to get that right. We must ensure that mis-selling does not happen and that households get the right advice, the right finance and the right deal for the long term, so that the money that is transferred between the energy sector and the property sector is used properly.
I want briefly to talk about local authorities; I am sure that my noble friend Lady Maddock will speak about this in more detail. I am disappointed that the role of local authorities does not appear slightly more in the Bill. Admittedly, recalcitrant landlords will in the end have to confront their local councils, as I think the Bill describes, but I would like to think that there is scope for the conversion of old houses and housing stock by street and by area, as that would be much more effective and efficient. That could be done well with local authorities. There is a good track record of schemes involving British Gas, for example, where households have been incentivised by council tax rebates to carry out home insulation, with money coming back through that route. I hope the Minister will look at that scheme and consider how it, too, can be harnessed for this purpose.
I am also interested in the area—I am sure that other noble Lords will mention it—of what I regard as inverted tariffs. Because of the way in which the market works in this country we have a situation where—certainly with electricity, and I think this applies to gas as well—you pay a much higher rate for the first units of energy used. The rate then goes down as your usage increases. While that is logical in terms of fixed costs and businesses looking to cover those fixed costs, it does not make a lot of sense in terms of energy management at household level. I should like to think that we can reconsider that as well.
As I said, the good thing about the Bill is that it deals with energy efficiency rather than some of the shiny technologies that are out there. However, one thing has been left out that, like the noble Lord, Lord Grantchester, I would like to mention, and that is geothermal. But I would also remind the noble Lord that, in their last energy Bill, the previous Government rejected my amendments on geothermal which would have created a framework in which it could flourish. Nevertheless, I know that the other side of the House has been generally positive about this technology. Under Chapter 3, which covers low-carbon generation, I should like to see a basis for geothermal licensing that allows investment to take place. I shall not try to sell its wares at great length, but geothermal is a renewable technology with a constant rather than intermittent or variable output; it has a small footprint on the ground; it is made up of tested technologies; and the UK has the opportunity to retake the leadership in it.
This is an excellent Bill and I am sure that all sides of the House look forward to its various stages. I know that we on these Benches will contribute to that very constructively.
Baroness Finlay of Llandaff
My Lords, I am sure that the Bill’s potential health benefits are obvious. However, I want to address one area where this Bill provides a unique opportunity to avoid a harm occurring, and that relates to carbon monoxide. I express an interest as patron of CO-Awareness, an organisation founded by Lynn Griffiths, who herself was subject to chronic poisoning, and ask the Government to address the installation of audible carbon monoxide alarms as part of the improvements in consumer protection made under the Green Deal.
I should like to tell your Lordships about a woman who came to this country as part of the Kindertransport. She lost all her relatives in the gas chambers, but as a young woman she fell in love, married and had two wonderful sons. She was very proud of these sons and put a great deal into their upbringing. The first went off to university. Shortly afterwards, his younger brother also obtained a place at the same university, and these two brothers, being close, decided to share a flat. As the winter got colder, they left the heating on overnight. They never woke up. She lost, with her husband, all that they had loved and cherished, this time to another gas, carbon monoxide.
What is the size of the problem? It has been estimated that there are 2,500 poisonings from carbon monoxide every year. That estimate comes from the West Midlands fire service. Levels of carbon monoxide in the air of over 60 parts per million can be dangerous. So if you come home in this cold weather, sit by your nice gas fire and think that you are safe, just remember that if you do not have a carbon monoxide alarm and the fire is not properly installed and gas is leaking, you might never wake up.
Classically, the reported groups affected are the young and the very old, who sit by the heating and possibly do not have maintenance. I reviewed the data from the Gas Safety Council for the past 13 years, from 1995 to 2008, covering 503 deaths, and plotted them out. The deaths occurred among people of all ages at a horribly steady rate. Lots of young people die from this cause every year. For 2009-10, there were 59 official incident investigations, involving nine fatalities and 117 casualties from carbon monoxide poisoning. In Wales in the same period, there were seven incidents with two fatalities and 10 casualties. However, if we add in media reports for that year, we see that there were 72 incidents with seven fatalities and 138 casualties. That might seem small, and given that in the previous year there were 56 incidents and 17 fatalities, one might think that the situation was improving, probably because of the use of carbon monoxide alarms. But it is just the tip of the iceberg.
The London Ambulance Trust last year equipped just five crews with carbon monoxide detectors and identified and treated 83 cases of unsuspected poisoning. It means that the headline data may mask a much larger underlying problem, which is that boilers over 20 years old are 20 times more likely to be involved in carbon monoxide leaks and incidents than boilers that are less than 10 years old. Indeed, a review of more than 1,000 adults taken to emergency departments showed that more than 1 per cent had raised levels of carbon monoxide. There was no correlation with heart rate, respiratory rate, mean arterial pressure or oxygen saturation. If it was not looked for, it was not detected.
Hackney Council, undertaking a survey of its properties, found widespread sources of carbon monoxide contamination not only from faulty gas appliances but from faulty wood-burning appliances. In addition, the way in which some groups, particularly ethnic minority groups, cook on gas cookers, whereby they put tin foil over the gas burner so that it does not burn properly and cook directly on it, leads to very high levels of carbon monoxide in their homes. The problem with making those places more energy-efficient and decreasing ventilation is that the levels of carbon monoxide will rise.
Halton Housing Trust, in the Liverpool area, has installed alarms and found that, in most of the cases where the alarm has gone off, it has been because there has been undetected carbon monoxide poisoning, particularly where improvements have gone in alongside the alarms.
GPs do not detect chronic carbon monoxide poisoning because it looks just like all the kinds of winter illness that people have; for example, flu-like symptoms, chest infections, headaches, difficulty concentrating, not sleeping, excessive fatigue, depression, nausea and vomiting and so on. The problem with chronic carbon monoxide poisoning is that people go on to undergo brain changes. They lose a coating over the nerve cells called myelin and get chronic neuropsychiatric symptoms. They do not even know that they have been poisoned, but end up coming into the chronic psychiatric group and exhibiting signs that resemble dementia. Chronic carbon monoxide poisoning is associated also with strokes and heart attacks because it thickens the blood, so that it sludges up in one’s blood vessels.
When carbon monoxide kills, it does so quickly, because it disturbs the motor in the cell’s mitochondria, leading to death from carbon monoxide poisoning within two or three minutes. Sometimes people become drowsy and die so quickly that it seems that they have not had time even to open a window or door. Administration of oxygen can help, but they die so fast that you cannot do anything.
Which? magazine has estimated that there are 125,000 Gas Safe-accredited gas engineers, but that nearly twice as many non-accredited fitters are carrying out repairs. The main cause of carbon monoxide poisoning is faulty repairs, lack of maintenance and faulty fitting. That is why the Gas Safety Trust is asking for it to be ensured that carbon monoxide alarms are included in the code of practice for improvements being made under the Green Deal in Clause 3(4) and (5) and Clause 7 of the Bill. The decreased ventilation that will go along with reducing energy consumption risks accumulation of carbon monoxide. The older housing stock has old appliances. Their alarms should be hardwired so that there is no problem of batteries running out or of people taking the batteries out to use on other things, such as the kids’ games, when there is no spare sitting around.
I ask the Government to take this unique opportunity to improve safety, and not to risk an unintended consequence of energy efficiency. The cost is estimated at £50 for the alarm and its installation, which can be offset in instalments paid over time through energy bills. But the offset of the cost to the NHS and the societal cost of young people dying from carbon monoxide poisoning represents a potential major cost-saving to the nation overall. I hope that the Minister will be able to reassure me that this has been taken seriously.
Lord Jenkin of Roding
My Lords, I am sure that I am not alone in having listened to the noble Baroness with great interest. I am sure that she has a point. I will come at the end of my speech to something that is not in the Bill that I would like to see there, but she made a very powerful point.
Most of my remarks will be about the Green Deal, which is at the heart of the Bill. I warmly support it. It has three major advantages over the processes that have been replaced, CERT and CESP—the carbon emissions reduction targets and so forth. My noble friend described the first advantage in some detail. It is the up-front financing with repayment in bills over a period. That is coupled with the golden rule, which is that the savings must be more than the cost of the measures taken. That is a very important step.
Secondly, the energy company obligation—the ECO—is very much better targeted than the targets for the priority group that existed under CERT. That affected no fewer than 11 million households and companies had to get 40 per cent of their savings from that, whereas the ECO is aimed primarily at the fuel poor and hard-to-heat buildings. That, too, is a great improvement.
Perhaps most significant of all is that the Green Deal abandons the concept of trying to measure carbon savings in individual households in favour of securing the benefit of lower bills and warmer homes. People will respond much more readily to the promise of lower bills and warmer homes than they would to appeals to save the planet by cutting carbon dioxide. That is the most important improvement that we have in the Bill.
I have been very critical in the past both of CERT and of its impact on the administration. The legislation and regulations were hugely complicated and they did not work. If you just look at the latest report on CERT by Ofgem, which publishes the figures, you will see that by November this year it had only achieved 58 per cent of its 2010 targets. Less than two-thirds of that is from insulation and more than a quarter is from lighting. I know that the previous Government ended the suggestion of distributing bulbs, but how many of the bulbs distributed are in fact not used? So here is another improvement.
So far as administration is concerned, I have some sympathy with points that have been made and we will need to make sure as we go through the Bill in Committee that this is really something that consumers can operate properly. My own experience in having my house improved is that the biggest single barrier is household hassle. The process set out in the Bill should in time gain a higher level of public confidence, but here again I agree with my noble friend Lord Teverson: everybody, all the bodies concerned, must join together in promoting the concept of the Green Deal. Local authorities are certainly important, as are a large number of social organisations. This cannot be done by the Government alone. Indeed, they should not even try to do it alone.
Many of the questions that one will have will need to be sorted out in Committee, and I shall not deal with them all. In the mean time, I have four specific concerns. The first concerns the individual initial accredited assessments. That is a very important first key stage in the process. It is not clear to me, nor is it clear to some of those whom I have been consulting, who is supposed to pay for these initial assessments. Let us suppose that an assessment concludes that this was not a case for a Green Deal and that the householder is not qualified for any special help under the energy company obligation. Who will pay for that assessment? Secondly, how will the golden rule actually be interpreted? A number of people with whom I have spoken have said that their experience is that if you improve somebody’s insulation, they prefer a warmer home to lower Bills. Indeed, how can you separate the two? The whole basis of the golden rule is that the costs should be less than the savings. There are questions there that we will need to look at.
Ministers have spoken about there being a radical overhaul of the energy performance certificates. Yes, they will be removing the restrictions on access to energy performance data and houses, but what other changes do the Government envisage? Happily, they have abandoned the absurd and unloved HIP process, but it is my understanding that the energy performance certificates will remain an integral part of the Green Deal process. We need to hear a bit more about that, and perhaps we can explore it in Committee.
Mention has been made of the Warm Front scheme; there is some anxiety that it is due to be phased out. My noble friend made a Written Ministerial Statement on this the other day. Yes, it has run out of money this year, but the existing approvals will continue to be made. The Statement also talked of approving new allocations after April 2011 and described it as a key tool for tackling fuel poverty in England, which has helped more than 2 million households. Yes, there is a consultation, but is it envisaged that the Warm Front scheme will exist alongside the Green Deal process. The noble Baroness, Lady Smith, shakes her head, but it is clearly going to go on for a while to judge from the Minister’s Statement. Is the new scheme going to be better at targeting the vulnerable people? Under the energy company obligation, I think that it will be better.
My last point on the Green Deal concerns the issue of who will bear the cost of consumer defaults. The provider of an approved Green Deal plan will advance the money to pay the approved installer; the energy supplier will be notified and will then recover the debt by adding instalments to the customer’s energy Bills. That is fine if it all goes according to plan, but if the customer’s debt is not allowed to be secured on his property, as is clear under the terms of the Bill, and he defaults, who will bear the cost? Is it the provider whose money has financed the up-front costs, or is it the energy supplier who is trying to collect the instalments? Again, my consultations suggest that there is some considerable concern about this. Clause 15 seems to suggest that the supplier will have to bear the cost. I am not sure that that is fair. All the preliminary assessments and the arrangements for the financing have been done by the provider, and these arrangements are entirely outwith the supplier’s knowledge until he is notified what he has to add to the Bill by way of payment in instalments. As I understand it, the Government have power under the bill to deal with that uncertainty, and I hope that my noble friend will give us some assurance on that, because I assure him that there are uncertainties out there in the market.
So far I have spoken about only the Green Deal, but I will mention one other point that arises under the security of energy supplies. Clause 77 gives Ofgem—in the Bill it is called GEMA, the Gas and Electricity Markets Authority, which I sometimes find quite confusing—the power to modify the uniform network code covering gas supplies so as to be able to deal with a gas supply emergency, which my noble friend referred to in his speech and which could lead to a dangerous fall in gas pressure if measures are not taken. Paragraph 218 of the Explanatory Notes says:
“For the pressure in the network to be maintained there has to be a balance between gas supply and demand. Gas taken from the network by consumers has to be replaced by gas flowing into the network from producers, gas processing facilities, storage facilities, interconnector pipelines and Liquid Natural Gas (LNG) import facilities”.
I draw particular attention to the word “storage”. Like the issue raised by the noble Baroness, Lady Finlay, that is not in the Bill. We will need more gas storage to deal with emergencies such as the possible cutting off of a source of supply or the huge gas consumption across the country that we face at the moment. It has been put to me that there needs to be an enhanced public service obligation on gas suppliers so that they can deliver new gas storage facilities, perhaps over the next five to 10 years, to strengthen the UK’s future energy security.
One must ask what paragraph 21 of the summary impact assessment means. If you have increased incentive to ensure the supply of gas, does that not necessarily imply some kind of enhanced public service obligation so as to encourage more supplies? I give my noble friend notice that I may table an amendment on this, to make provision for such an enhanced public service obligation. This is not the moment to express all the arguments in favour but it is quite amusing that last night, as I was drafting my speech, my mobile phone buzzed. I picked it up and it was a communication from British Gas, my gas supplier at home in London, which said:
“Severe weather is impacting normal service in your area. If you have a central heating problem, please visit britishgas.co.uk for tips from our expert engineers”.
Well, I am not a great expert on the internet, but I tried. I could find no tips. However, it prompts me to ask whether, if the UK had more gas storage, British Gas would have needed to put out that warning. Perhaps it would not need to cut off businesses with interruptible supplies. That message certainly strengthens my determination to persuade the House that Clause 77 needs to be strengthened by promoting new incentives to provide gas storage. In his opening speech, my noble friend referred to sharpening incentives for that. If that does not mean some kind of enhanced obligation on gas suppliers, I am not quite sure what it does mean. Perhaps we will be able to explore that further in Committee.
Lord McFall of Alcluith
My Lords, in contributing to this debate, I will focus on Part 2 of the Bill, which covers energy security, and make passing reference to fuel poverty. These issues, particularly energy security, are ones that I have discussed with a local company, Aggreko, in my home town and its chief executive, Rupert Soames, who, as many know, is the grandson of Winston Churchill and the brother of the Member of Parliament Nicholas Soames. I never asked Rupert what he wanted to be remembered best for; I left that aspect. Rupert is chief executive of a company that started 20 years ago in Dumbarton as a tiny business and has now grown to be a FTSE 100 company. It is a global leader in temporary electricity generation and has a market capitalisation of more than £4 billion. Only yesterday it was announced that Aggreko had secured the temporary electricity generating arrangements for the London Olympics. That builds on its success last year in the World Cup and the Winter Olympics in Canada.
I should also like to promote the theme of localism. As I have mentioned, Aggreko started locally. It reached the stage where it was deciding, in the interests of growth, whether it would stay in Dumbarton or move abroad to China or elsewhere. I chair a public-private enterprise company, Strathleven Regeneration Company, which was established on the closure of the JNB bottling plant 12 years ago. We have 120 acres of land, which we are developing for housing and business development. For example, the BBC has come to the site to film the Scottish soap “River City” and a programme with which Members will be more familiar—“The Deep” with Minnie Driver and James Nesbitt. It is a growth area. Aggreko and the Strathleven Regeneration Company got together to decide where Aggreko’s next plant would be; we hoped that we could influence it to stay in Dumbarton, which indeed it did. A headline in the Times on Saturday read:
“Dumbarton is driving Aggreko’s new global growth”.
Rupert Soames is very clear about why he stayed in Dumbarton. He said that Dumbarton, not China or elsewhere, was chosen because that is where there are skilled engineers. There is an issue here for manufacturing and localism. We must take this seriously in the debate on energy and energy security.
Energy security was something that the Labour Government came up against very clearly at the beginning of the decade when, with panache, the Prime Minister said that we would not focus on nuclear energy. Two years later, given the instability in Russia and elsewhere, it was decided that we had better have another White Paper, look at the issue of energy security and embrace the nuclear option. That was the right step for us to take. It is hugely important in maintaining provision. I commend to the Minister the speech that Rupert Soames made to the Scottish Parliament on 12 November when he said that, in his travels around the world, he sees the consequences for countries whose energy policies do not work as they intended. He commented:
“Customers come to us when they have run out of power; when they have power cuts for five or six hours a day; when hospitals operate by candlelight; when traffic lights don’t work; when sewage works stop”.
That is how essential energy is to us. We need to inject the word “urgency” into our debate on energy.
We should start this debate by saying that energy is vital. We cannot do without it and it is directly relevant to the daily lives of everyone in this country. Therefore, we must continue to think about the long-term future. However, there is a danger that this could distract us from the more pressing, immediate problems. For example, over the next three years we will lose 30 per cent of our electricity generating capacity, including a third of our coal-fired capacity, two-thirds of our oil-fired capacity and nearly three-quarters of our nuclear capacity. Currently, we are not building enough capacity to replace this. Major projects have been put on hold, including Kingsnorth, Baglan Bay and Drakelow power stations and the gas storage facility at Caythorpe. Planning consent has been granted for 7,000 megawatts of wind farm capacity but less than a third of that is under construction. While it is important for us to think about 2030, we also need to focus on how we will keep the lights on in 2018. We must reinvigorate this debate with more realism. The targets for carbon reduction are vital but we must be realistic about their timing. Power generation capacity takes a long time to build. For example, it is unlikely that the new nuclear power stations could be fully up and running by 2018. As I mentioned earlier, we have planning consent for new wind energy capacity but much of it is not being built.
We must also be realistic about how we will reach these targets. We would all like to see new capacity come from renewable energy sources, but given the time and technological constraints I fear that this is not possible. Over the medium term, if we wish to decarbonise energy, we will need to build up nuclear capacity. In the future, as we replace capacity in the UK, there will be huge global demand for power. By 2015, 25 per cent of the world’s power stations will be more than 40 years old, so we will need to be strategic about how we attract investment in energy into the UK. One of the key elements that any investor will look at is the stability of the regulatory regime. That means that, rather than making short-term political decisions on energy policy, we must create a long-lasting consensus around a strong system that can create confidence. The target for all of us in this House is to create that confidence for the longer term.
I have already mentioned fuel poverty. The Labour Government tackled child poverty targets admirably; I think that they took more than 600,000 children out of poverty. However, they did not realise the ambitious targets that they had set themselves given the complexity of those targets. One of the themes of the House of Commons Treasury Committee that I chaired, and to which Members on all sides agreed, was to press the Government to ensure that they reached those targets. Poverty, particularly fuel poverty, is something that we cannot allow to go out by the side door. I fear that it will be a casualty of the cuts if we do not keep it well in our sights. Some 500,000 higher rate taxpayers receive the winter fuel allowance. The Government should look at that area if they wish to combat fuel poverty. If the coalition’s public spending cuts are to be governed by fairness, that issue has to be embraced, difficult though that may be.
The Minister said that the Green Deal is working for ordinary people. Indeed, between 1996 and 2003, fuel poverty fell by more than 70 per cent, thereby helping more than 4 million people in poorer households with their fuel bills. However, there is a worry about that going forward. Charities have commented on the Warm Front scheme, which helps households with heating and insulation costs. That scheme will not take on any more cases until next April, so there will be a backlog of people needing it. Age UK has said that that could be “disastrous” for many people. That has to be a primary element in the Government’s agenda. Age UK, along with Consumer Focus, has said that, despite past problems, the Warm Front scheme has,
“provided much-needed help for millions of older people during the last decade. With an estimated 3.5 million older people living in fuel poverty, it is a huge concern that many frail and vulnerable older people … will now be left to their own devices”.
We cannot allow that to happen. The Government have to embrace this concept. We cannot leave the Government to their own devices as regards energy security. They have to work with others in this area where examples of decentralisation and localism are all around. Only by doing so can we ensure that we keep the lights on for the long term.
Baroness Maddock
My Lords, before making my comments, I declare two or three interests: I am president of the Micropower Council, a vice-president of National Energy Action—a charity working in the area of fuel poverty—and a vice-president of the Local Government Association.
Few people will have objections to the main aims of the Bill, which are to tackle barriers to investment in energy efficiency, to enhance our energy security and to enable investment in low-carbon energy sources. Of course, there are those who think that we should not be tackling the causes and manifestations of climate change, but what I find difficult to understand is how those who hold that view can believe that we should ignore the fact that we have a world population that is growing ever faster—many of whom are aspiring to higher and higher standards of living—and continue to use the world’s resources profligately. I fail to understand that, even if those who hold that view cannot accept the climate change science. Looking at the list of speakers, I am sure that we will hear such views again today.
We all have a responsibility to do what we can to stop the wasteful use of resources, as my noble friend Lord Teverson has mentioned—that is why I and others support the aims of the Bill—but, like other noble Lords who have spoken today, many people want a little more clarity about how the programmes and policies are actually going to roll out. This House will, as usual, scrutinise thoroughly and help to improve the Bill as it goes through its stages, and we have already been inundated with briefings from all sorts of organisations. Many focus on how the Green Deal will work in practice. Most applaud the aims behind the Green Deal, but there are common concerns throughout the briefings. The briefings come from possible providers of finance, environmental groups and those involved in the building trade and all the other work required for installing energy efficiency products. I hope that the Minister will be able to clarify and expand on the proposals—if not at great length today, then as we go through the Bill’s stages.
What is it that many people want to know? They want to know how the Green Deal will work in practice, as opposed to theory, and how it will encourage more people to take up energy efficiency measures than other initiatives that have gone before. As has been mentioned, people are worried about whether there is the capacity to roll out the Green Deal on the scale predicted by the Government. Will there be the businesses to do the work and properly trained people to produce the energy performance certificates? Another question that has been touched on today is whether the Green Deal is a suitable vehicle for the fuel-poor to escape their fuel poverty. How will the rollout be monitored? People are concerned that the Green Deal will create a top-down approach—my noble friend mentioned local authorities, which I will say more about later. We are set to dismantle many community-based schemes and other programmes in the area of energy efficiency, and my worry is that this is beginning to happen before new schemes are in place and are seen to be effective. Other people are worried that the scheme might encourage short-term energy efficiency rather than look at overall whole-life carbon impacts.
One briefing in particular that I want to draw to the Minister’s attention is a joint statement from the World Wildlife Fund, the Great British Refurb Campaign, the Federation of Master Builders, the Green Alliance, the UK Green Building Council, Marks and Spencer and B&Q. All are concerned and want to be involved with the Green Deal. I shall highlight for the Minister a couple of things from their statement, which says:
“Clarity on the scale of ambition, pace and timings of the programme … is essential for establishing confidence in the programme, giving business certainty and attracting sufficient large-scale investment”.
Another point made by the group is:
“Our experience and research suggests that the carbon and financial savings that householders could achieve through the Green Deal will not be sufficient to drive significant participation. Additional government intervention is therefore necessary”.
The group makes various suggestions, some of which have been referred to already, including:
“Outside of the Bill a framework of incentives that support the emissions reduction aim of the scheme should be developed. This should include complementary fiscal incentives and other tools designed with human behaviour in mind, such as variable rates of council tax, stamp duty reductions, and a reduced VAT rate for retrofits through the Green Deal”.
I am sure that the Minister is aware of that point, and I hope that we will get some clarity as we spend some time discussing this in future.
Not surprisingly, the rest of my comments will refer to Clause 102, “Repeal of measures relating to home energy efficiency”, which will repeal the Home Energy Conservation Act 1995, which I sponsored successfully as a Private Member's Bill when I was a Member in another place. I will remind noble Lords briefly what that Act did—or rather does, as it is still in force. HECA requires all UK local authorities with housing responsibilities to prepare an energy conservation report that identifies practical and cost-effective measures likely to result in significant improvements in the energy efficiency of all residential accommodation in their area and to report on progress in implementing the measures. A “significant improvement” was defined as one that produced a 30 per cent improvement in energy efficiency.
HECA was designed to last for 10 to 15 years from April 1996, so I suppose that we are running out of time, but the way in which the Government have approached the repeal of the Act has been distressing. There are four short paragraphs in the notes accompanying the Bill and there is little more than one page from DECC on the reasons for repealing the Act. I understand why the Government want to repeal the Act, but—as the sponsor of HECA, I would say this—I am extremely disappointed at the cursory dismissal of what the Act achieved. I and many others spent a lot of time 15 years ago, when energy conservation was not mainstream, persuading the then Conservative Government to give a fair wind to my Private Member’s Bill. I make no bones about the fact that a lot of people helped me—I happened to be the right person in the right place at the right time—although I cared passionately about the issue from having lived in Scandinavia many years before. The clincher for the Government was that they wanted something to say at Rio.
DECC makes various comments about the Act and why it needs to be repealed. It states:
“In late 2007, the Government”—
that is, the previous Government—
“held a public consultation exercise on the future of HECA. The Consultation set out the conclusions of a Review of the Act which began in autumn 2006 ... the Government recommended repealing the legislation … on the basis that it had not been, in itself, responsible for improvements in energy efficiency in the household sector and was unlikely to be so in the future”.
That is not entirely accurate. Even as recently as 2005, the then Environment Minister, the noble Lord, Lord Bach, claimed in your Lordships' House that, in its first eight years, HECA delivered savings of 93.4 terawatt hours of domestic fuel. To put that figure in perspective, that is a larger saving than that attributed to the first phase of the energy efficiency commitment, which was 86.7 terawatt hours and where targets were overshot by 40 per cent. It is important for all the people involved that that is on the record.
A lot happened under HECA. Local authorities did the work—I have already outlined the savings—and set up all sorts of schemes. There was a HECA officers network and there were HECA grants. I chaired the committee administered by the Energy Savings Trust that gave out those grants. I recognise that things move on, but I am deeply disappointed that the Government have been so dismissive of the huge amounts of work that were done and of the successes that happened under HECA.
The Government have made great play of their consultation, on which they state that various bodies are happy to see the Act repealed. However, one of those bodies is the Local Government Association, which has been,
“campaigning for a rationalisation of the obligation and reporting requirements on local authorities”.
However, the Local Government Association says that, while the repeal of HECA will reduce the burden on local authorities,
“it must be complemented with a clear role for local authorities within the Green Deal and in the delivery of the Carbon Emissions Reduction Target and Home Heating Cost Reduction Target, if the ambitions of these programmes are to be realised effectively, efficiently and equitably”.
My noble friend Lord Teverson also mentioned the role of local authorities. As we look at the Bill more closely, I hope that the Minister will be able to assure us that local authorities will still be at the heart of trying to deal with energy efficiency in our homes. I can recommend to him, and even pass to him, an excellent article by a friend of mine, Andrew Warren, who is in charge of the Association for the Conservation of Energy, written when the Labour Government were trying to repeal the Act in 2008. The Labour Government came into power soon after the Bill became an Act, although they never used it very much. They did not even bother to collect the figures from local authorities and did nothing to set up a decent reporting system to help local authorities to deal with the issue.
As I said, I believe that a lot of good work was done in the days when energy efficiency was not popular. I support what the Government are trying to do here, but I am absolutely adamant that local authorities need to be involved. I look forward to assurances from my noble friend that he understands my point of view on this.
Lord Best
My Lords, my comments address Chapter 2 of the Bill concerning the private rented sector. I declare my interest as chair of the Private Rented Sector Policy Forum, which brings together representatives of tenants and landlord organisations. I have declared my other interests in the register.
I think that the Green Deal is a really helpful and innovative response to the urgent need for investment in energy-saving measures in the PRS—the private rented sector—and I congratulate the Government on bringing forward these proposals. For years, many of us with an interest in the PRS have worried about fuel poverty among poorer tenants. The sector has the worst record for unfit houses, yet landlords have had little incentive to upgrade the energy efficiency of their properties, as they do not pay the heating bills. Quite a few small-time landlords—and there are more than 1 million private landlords in the UK—have not had the resources to do the necessary work. Some are relatively poor themselves and, because the cost of improvements can seldom be recovered in the rent, they are unlikely to act. Some are heavily mortgaged as buy-to-let investors and cannot take on further debt.
Even in extreme circumstances where the property is so badly insulated and heated that it requires a small fortune to keep it warm, and indeed where it constitutes a health hazard, local authorities have been reluctant to get involved for fear that the landlord will simply withdraw a low-rent property from the rented market. That is a bigger risk than ever at a time when cuts to housing benefit mean that landlords are going to be increasingly reluctant to let to those on lower incomes.
The Green Deal addresses this dilemma. The landlord does not have to pay and, although the cost falls on the tenant, because fuels bill are reduced and costs are spread over many years, the tenant should get a much warmer and more comfortable home for little or no extra monthly expenditure. The landlord benefits from an improved property, which is less likely to deteriorate through dampness and have problems with mould growth, and indeed from more contented tenants, and the planet benefits from lower CO2 emissions. So, is the job done? Will the Energy Bill achieve the breakthrough needed here and ensure that thousands of sub-standard properties are uprated in terms of energy efficiency, or are there still some improvements to be made by your Lordships to these measures?
The Association for the Conservation of Energy and Friends of the Earth, with some 30 organisations in support, believe that the Bill should go a step further and prohibit the letting of properties that have failed to meet a minimum energy efficiency standard by 2016. That approach is supported by the London Mayor, Boris Johnson, and by the Government’s fuel poverty advisory group. The latter favours making it illegal to let a property with an energy performance certificate that rates it as F or G—the bottom of the scale. The British Property Federation, however, speaking for landlords—and a number of landlords spoke at a meeting of the PRS policy forum last week—disagrees. It thinks that compulsion would be counterproductive and states, among other things, that using the energy performance certificates would be a flawed approach. It accepts the Government's own fallback position, if a review one year on shows that landlords are not responding to the opportunities presented by the Green Deal—namely, to empower tenants to require reasonable energy improvements to their homes, with local authorities given new powers to act.
I hope that we can explore the arguments here as Committee progresses. My initial comments cover both carrots and sticks, and are as follows. First, the Green Deal arrangements, as presently proposed, will not work where the cost of the upgrade to the property is so much that the burden of repayment that falls on the tenant, even if spread over 25 years, leads to a much bigger monthly payment on the fuel bill. Indeed, in such circumstances, fuel poverty could be worse than before. For older houses—and 40 per cent of the private rented sector stock was built before 1919—costs could indeed be high. Cavity wall insulation is not possible for those properties, and solid wall insulation can cost more than £10,000 per house. It is hard to fit double glazing economically in listed buildings or properties in conservation areas, where extra planning restrictions apply.
I suggest, therefore, that in those high-cost cases, the benefits of greater energy efficiency in reducing CO2 emissions go beyond the advantages to tenants or, indeed, landlords, and justify for the greater good the public subsidy which, if those properties are ever to be uprated, will be needed. A gap will have to be bridged between the expense it is realistic and fair to expect the tenant to cover and the actual cost of the energy-saving improvements.
Secondly, it seems likely that a lot of landlords will not be minded to do very much about the Green Deal unless pushed quite hard. There will be a role here for managing agents, who look after some 60 per cent of all privately rented properties, and who should be targeted just as much as landlords themselves by the energy companies, the Green Deal providers. Should a target be set for those providers to bring a fixed proportion of privately rented homes into the fold, rather than just concentrating on the easier option of persuading homeowners to take up the deal?
It seems unrealistic to expect tenants in poor quality property to be the front line in making negligent landlords, the ones without any excuse for inaction, take up the new opportunities. There is a high turnover in that sector, with lots of young, mobile tenants moving on within a year or so. They are not going to get into the hassles of making their landlord perform.
The Government need to factor in here the impact, especially from 2012 onwards, of those housing benefit cuts. Any tenant in receipt of local housing allowance, or in any danger of their income falling to the point where they may need LHA, cannot afford to fall out with their landlord in any way. They will already be having to request a rent reduction at a time when rents are rising in the face of acute shortages, and it seems improbable that they will risk losing their home by taking action against their landlord to install energy efficiency upgrades to the property. Yet it is at this end of the market that the lowest standards are likely to prevail.
In putting the onus on tenants to propel the Green Deal, if that is not likely to achieve much, it would certainly be worth enhancing the role of local authorities, as the Bill proposes, to step in. However, I am anxious that councils will need resources to play their part. With so many other demands on their financial and human resources, they may be minded to put this low on their list of priorities, unless there are specific incentives to drive this forward. It would certainly seem worth while for government to give itself the powers, used only in prescribed circumstances and with proper exemptions, to ban landlords letting the very worst properties. The threat of action may well be a sufficient stick to prevent the need for intervention. What are the dangers of this driving out some landlords? Clause 40 stops the Secretary of State pursuing changes that could decrease the number of properties available for rent, but I am not sure that it would be such a bad thing if some poor quality rented properties were sold off into owner-occupation where more energetic new owners can take up the opportunities and bring these properties up to standard.
I greatly welcome the Energy Bill’s proposals for improving the energy efficiency of privately rented properties, thereby easing the horrors of fuel poverty, excess winter deaths and the miseries of living in cold, damp accommodation. During the Committee stage of the Bill, I hope we may be able to explore some of the changes to the Bill and, as always in your Lordships' House, send it on its way with some helpful improvements.
Lord Lawson of Blaby
My Lords, let me first declare an interest as chairman of the Global Warming Policy Foundation, of which I gave fuller details in this House on 2 November. I must say that I am not the slightest bit surprised that this Bill has the support of the party opposite. It is the most dirigiste legislation the present Government have so far produced.
What I propose to do today is to look at the philosophy and policy that lie behind the Bill, to which the Minister alluded in his opening remarks. It is an area in which I have form, as it were. As the Secretary of State for Energy and Climate Change, my right honourable friend Mr Huhne, wrote in the Daily Telegraph on 16 December:
“So today the Coalition begins a consultation on a reform that would reshape this market more fundamentally than at any time since the 1980s, when the Lawson reforms were the pioneer of Europe's deregulation”.
Nor were those reforms simply a matter of energy privatisation, although that was an important part of them. They went much further than that. As Oxford’s Professor Dieter Helm has written in his definitive work, Energy, the State, and the Market: British Energy Policy since 1979,
“the principles of energy policy were rewritten, notably after Nigel Lawson moved to the Department of Energy. His restatement of energy policy in his speech on 'The Market for Energy' in 1982 can be seen, in retrospect, as a defining moment. A new philosophy was set out, motivating much of what followed. His rejection of planning and many of the activities then going on within the Department of Energy was revolutionary at the time”.
That new approach produced well over a quarter of a century of reliable energy supplies at the lowest practicable cost. It should not be torn up, as it is now being torn up, without very good reason.
So what is the reason? According to Mr Huhne, in his Statement on so-called “Electricity Market Reform” last week:
“The current energy market has served us well, but it cannot deliver long-term investment on the scale that we need, nor can it give customers the best deal. Left untouched, it would lock carbon emissions into the system for decades to come”.
So there we have it. Pace Mr Huhne the market can certainly deliver adequate investment, provided it is free from arbitrary government impositions and from major uncertainties about future government energy policy. It can undoubtedly give customers the best deal, as it has for more than a quarter of a century. But it is true that it may well lock carbon emissions into the system, to use Mr Huhne’s phrase, for decades to come. That is precisely because it is carbon-based energy that now, and for the foreseeable future, gives energy customers, both corporate and individual, the best deal. Indeed, Mr Huhne freely admitted as much when later in his Statement he said:
“At the moment, there is a bias towards low-cost, low-risk fossil fuel generation”.
Indeed there is, and quite right too—except that it is not a bias. It is the market providing UK energy customers with the best available deal.
The purpose of this Bill, or, rather, the policy behind it, is to bring that to an end in an obsession to eliminate United Kingdom carbon emissions. Again I will quote from the Statement for what I promise to be the last time. Mr Huhne said that,
“we face growing demand, shrinking supply and ambitious emissions reductions targets”.—[Official Report, Commons, 16/12/10; col. 1064.]
We do indeed face growing demand, although the massive economic burden imposed by the energy policy that lies behind this Bill will certainly damage the economy sufficiently to reduce the growth in demand. We are undoubtedly lumbered with self-imposed unilateral emissions reductions targets. The reference to “shrinking supply” is complete nonsense. It is the very reverse of the truth. Indeed, Mr Huhne admitted as much when he explained to the CBI:
“Left untouched, the electricity market would allow a new dash for gas”.
Indeed, so it would and so it should.
The most dramatic technological breakthrough in the world of energy since my time as Secretary of State almost 30 years ago is the very recent development of horizontal drilling and hydraulic fracturing, which together have made the production of gas from shale economic and highly competitive. As a result, the official US Energy Information Administration, for example, announced only last week that America’s technically and commercially recoverable shale gas reserves are twice as abundant as they previously thought them to be. Indeed, the United States is already set to overtake Russia—if it has not already done so—as the world’s largest gas producer, and this is just the start.
Although America has been first in the field—a result of a technological breakthrough by the private sector, incidentally, which owes nothing to any government support or technology stimulus—the world is awash with shale, in Canada, Europe, Asia and Australia. We now know that we live in a world in which there will be an abundance of gas far into the foreseeable future and beyond. Because it is spread throughout the world, we no longer need to fear the strategic insecurity of being overdependent on either Russia or the Middle East.
Indeed, in so far as there is an energy security problem in this country, it stems entirely from the Government’s obsession of ensuring by means of massive subsidies, combined with growing penalties and restrictions on the use of gas, that we become heavily dependent on wind power. That government-imposed insecurity has three dimensions. First, there is the inherently unreliable nature of wind, which sometimes blows and sometimes does not. Secondly, there is the question of whether it is practically possible to build and install wind turbines on the scale required to meet our energy needs, leaving aside the huge economic and environmental costs of doing so. Thirdly, there is the fact that an indispensable component of wind turbines is neodymium, a rare mineral, which is mined and refined—in a highly polluting way, incidentally—only in China, so we are dependent completely on China.
What are the consequences of the new energy policy which lies behind this Bill, whose essential purpose is substantially to raise the cost of UK energy by turning our back on abundant low-cost gas and relying on higher cost nuclear power and, to an even greater degree, on very much higher cost wind power? There are three consequences, two of them certain and the third quite likely.
The first is that by substantially raising the cost of energy, the policy will do great damage to the economy in general and to manufacturing in particular, at a time when it is clear that our principal competitors overseas have not the slightest intention of following suit. It is indeed curious, to say the least, that a Government that came to power saying they wished to rebalance our economy so as to reduce our relative dependence on financial services, which implies having a stronger manufacturing sector, should be determined to impose the most anti-manufacturing energy policy of any Government in British history.
The second consequence is that, despite the provisions in the Bill before us today, the massive rise in energy costs, which is the clear purpose of this policy, will lead to a huge increase in fuel poverty at a time when conditions are tough enough as it is for those on low incomes. Those two consequences of this policy are certain.
The third, which is not certain but quite likely, is that the dysfunctional energy policy to which the Government are committed will prove unable to provide sufficient reliable electricity to meet the nation’s demand, and the lights will go out. The noble Lord, Lord McFall, warned of that in his intervention earlier in the debate. And all this in the cause of eliminating UK carbon emissions.
Moreover, there is a further irony. Per kilowatt of electricity generated, gas produces only half the carbon emissions of coal, so it is quite possible that by switching from coal to gas, the UK might be able to meet or at least get very close to the 2020 target for emissions reductions enshrined in the Climate Change Act. It would not, of course, make it possible to meet the near total decarbonisation enshrined in the 2050 target, but by 2020, or more likely well before that, it will have become abundantly clear that global decarbonisation is simply not going to happen, and that for this country to persist with a policy of unilateral national decarbonisation will be manifestly absurd and indefensible. Indeed, as we suffer the coldest winter since records began 100 years ago, well before 2020 it might just begin to dawn even on green-obsessed government Ministers that there may not be any case for doing so.
At present, the coalition Government are having to tackle with determination and vigour an unenviable fiscal inheritance in a tough economic climate. I wish them well. But to make that task substantially harder by embracing, for no good reason whatever, the massive self-imposed economic burden embodied in the policy which lies behind this Bill is madness.
Lord Giddens
My Lords, it is almost Christmas and at this time of year one is supposed to be merry, so I thought I might start by telling a joke, at which I hope the Minister might at least be able to giggle. I was looking for a joke on oil and energy. They are not too easy to find, but I did discover one about the BP oil spill, which we discussed last week in your Lordships’ House. Scientists have developed a way of running a car on water. The only drawback is that the water has to come from the Gulf of Mexico. Well, I did my best.
I have been impressed by the breadth of welcome given to this Bill, although not from all quarters, of course. It ranges from environmental NGOs to the Committee on Climate Change to energy companies. The Bill builds on the framework laid down by the previous Government, and rightly so.
As I have stressed many times in your Lordships’ House, it is very important that there is cross-party consensus on climate change and energy policy. I have crossed swords with the noble Lord, Lord Lawson, on many occasions and I respect what he says. However, it is very important that there is not a polarisation between left and right on this framework of policy and therefore I am happy to support it. We saw with what happened in the United States how disastrous it is if there is a polarisation between left and right around climate change and energy policy.
Unlike the noble Lord, Lord Lawson, I congratulate the Minister, the noble Lord, Lord Marland, on the vigour and determination he has brought to this process. Not least important, the Treasury seems fully on board with the proposals incorporated in the Bill. This situation is reassuring because, again unlike the noble Lord, Lord Lawson, I think we are talking about revolution within the British economy and the broader global economy. The recent report of the Committee on Climate Change, again rightly, recommended that the power sector be virtually wholly decarbonised by 2030, which is a truly radical proposal.
No doubt criticisms can be directed at some aspects of the Green Deal—noble Lords have already done so—and improvements suggested. The Government are right to place a great deal of emphasis on it given the poor quality of the housing stock in the United Kingdom in terms of insulation and heat retention, to which other noble Lords have drawn attention. I am also pleased to see that we are getting closer to realising the Government’s stated intention to put a floor price on carbon, with a final decision to be taken, as I understand it, in the Budget in March. The new provisions for enhancing energy security are very welcome, as is the proposal to limit carbon emissions from existing coal-fired power stations by means of an emission performance standard.
I have three questions for the Minister; they do not concentrate solely on the Green Deal but on a number of issues surrounding it. First, have the Government given thought to the implications of Jevons paradox? This is very important. W Stanley Jevons, who was a famous economist, showed that greater energy efficiency leads to higher overall energy consumption; that you get a perverse outcome from increasing energy efficiency. He said:
“It is a confusion of ideas to suppose that the economical use of fuel is equivalent to diminished consumption. The very contrary is the truth”.
He deployed a large range of historical evidence to this effect but I shall offer the House a humble and more macroscopic example: when fridges became more efficient, people simply started buying larger fridges and used more energy than before. The most energy efficient country in the world is Japan, but it has a steeply climbing carbon emissions curve.
This is serious for the Bill because it means that the Government must place it in an analysis of the wider economy in terms of its knock-on consequences. I should like to know what thought the Government have given to this because otherwise, even though it sounds somewhat ugly, the Jevons paradox could undermine the whole thrust of what the Bill is supposed to achieve.
Secondly, job creation is often mentioned as an important outcome of investment in home insulation, renewable energy and wider energy innovation. However, there is an awful lot of loose talk around this, some of which appears in government documents, I am afraid. Where it is said, for example, that wind power will create so many thousand jobs, what is important is not the jobs that are created by specific technologies or innovations but, because jobs will be lost in the older energy industries, the net new jobs that are created. Have the Government done a calculation of net job outcomes from the innovations in the Bill and the wider innovations that are proposed? Without that, you cannot say that these innovations will create net new employment. Most new technologies tend to reduce the need for labour rather than expand it. This is an important aspect of investment in new energy technologies and I feel that a lot more work must be done on it than I have seen. As I said, many statements on this topic are simply superficial.
Thirdly, as outlined in the Bill, planning and the core role for the state are integral to the Government’s proposals. The noble Lord, Lord Lawson, called them “dirigiste” proposals, essentially as a way of dumping on them. I would say the opposite. I think that it is right and proper in energy and climate change, where you are planning for a 20-year or 30-year cycle, to have a plan. Planning is integral to this and the Government are right to say so, but why only here and not in other areas? This comes back to a point made by my noble friend Lord McFall. Energy is one area where there could be a renaissance of British manufacturing, as has been mentioned, but at the moment the situation is that, with most of the technologies involved, we will be dependent on foreign providers: the French for nuclear power, the Germans and the Danes for wind power and the Chinese for solar power. Why, then, do the Government not have an investment-led strategy for linking a renaissance of manufacture to the implications of the energy framework that they have introduced? Quite contrary to what the noble Lord, Lord Lawson, said, one needs an investment strategy with targeted regional planning if one is really going to use energy innovation as a means of helping to promote a renaissance in British manufacturing.
Baroness Parminter
My Lords, I add my welcome to the Bill, which will, if implemented successfully, no doubt help the transition to a low-carbon economy for the UK, deliver much needed green jobs and guarantee energy security, which a number of noble Lords have mentioned. However, there are four areas on which I should like to ask for further clarification and perhaps, as the Bill goes through Committee, for some tightening up.
The first issue, which a number of noble Lords have raised, is delivering on the Government’s ambition. As my noble friend Lord Teverson mentioned, the Government have stated on a number of occasions that, by 2020, 14 million homes might benefit from retrofitting if the Green Deal is successful. However, the Government have not been clear on the level of energy and carbon savings that that would achieve. That is crucial, as this is our flagship policy for ensuring that we reduce emissions from our homes, which account for nearly 25 per cent of our total emissions. If we do not achieve it in this way, other sectors will have to deliver those savings, which, as we know, can often be done only at much greater cost than through energy saving. Does the Minister believe, as I do, that the Bill would be much stronger if it provided for an annual report to Parliament on progress with targets, with appropriate indicators, so that we can see that the necessary targets for emission reductions are being met?
The second issue is incentives. I agree with the noble Lord, Lord Jenkin, that, although we may well appeal to people’s better nature to introduce energy saving, what is encouraging about the Bill is that the Government have realised that we have to nudge people forward and offer incentives. Like other noble Lords, I should like some reassurance about the level of incentives that are being proposed. WWF has issued research showing that 7 per cent of home owners are keen to take part in measures such as those proposed in the Green Deal when interest rates are 6 per cent or lower, but that that figure reduces substantially if interest rates go up. I would be interested to know whether the Government have done any research into the level at which interest rates for the Green Deal might be set and the impact it might have on possible further incentives, such as those mentioned by my noble friends Lord Teverson and Lady Maddock, to ensure that we reach the essential uptake in this area. I have been interested in these issues for some time, certainly since I was involved in the whole area of planning, including the issue of how one can get community benefits that are targeted rather more towards the individuals within communities. Planning applications for renewable energy sites are an example. If planning applications are approved, you might be able to get discounts for the people in the local area, rather than parks, as the community benefit. I would like to see that area explored rather more fully.
Thirdly, I would like to pick up an issue that was mentioned by the noble Lord, Lord Grantchester—redress. The Bill is right to focus on ensuring that it delivers. However, it is not as clear as it might need to be on redress. As we all know, consumer confidence will be critical to ensuring the success of the Bill. The Bill indicates that the Secretary of State can issue a code of practice and regulate the conduct of assessors, producers and, indeed, their installers, but it is much less clear on the process for resolution when things go wrong—when bad advice is given or installations go wrong. The summary document talks about elevation,
“to an independent body for resolution where necessary”.
That really is not strong enough. If we are to make a success of the scheme, people need to know up front that they will not be passed from pillar to post in such circumstances. As the noble Lord, Lord Grantchester, said, with the abolition of Consumer Focus, the Bill would be immeasurably strengthened if there were a regulator or green energy ombudsman with statutory power so that people know that there is somewhere they can turn to if they receive—I hope it does not happen but am sure it will in certain cases—bad advice or are subject to mis-selling.
Fourthly and finally, I want to address an issue which I do not think other noble Lords have addressed today—the need to create a level playing field for renewables. The Bill clearly expresses the Government’s aim of achieving the co-existence of the UK gas and oil sectors with the renewable energy organisations, but to deliver this parity the Government will have to address one long-standing issue—the possibility of early repeal of Crown Estate leases when an oil or gas bid is received prior to the expiry of the lease. This creates an unacceptable level of risk for investors in offshore development. The Government say that it has not been a problem to date, and indeed Warwick Energy, the company that has recently been responsible for the largest offshore wind farms, has said that it has managed to find a way of working alongside the oil and gas companies. However, I think we need to realise that the offshore projects currently under development are much larger, further offshore and within known oil and gas provinces. If we do not address this issue soon, it will come back and bite us. I know that the Government are looking at that, but I should hope to see as a matter of urgency a protocol that learns from the experiences we have gained through companies such as Warwick Energy that can create a framework for co-existence. Without such a framework there could seem to be a bias in favour of the oil and gas industry.
We also need to find ways of creating early dialogue between the respective companies, despite the fact that much has been achieved in the planning process. I certainly hope that there might be some changes in the granting of consents under the Petroleum Act in order to ensure that there is much earlier dialogue between the renewable industry and the oil and gas industry.
Like the majority of noble Lords, I welcome the Bill. However, I ask the Minister in his summing up to comment first on the possibility of an annual report to ensure that we deliver on the targets that the Government are setting. Will he comment, secondly, on the issue of incentives, which a number of Members have raised? Thirdly, will he address the possibility of a green energy ombudsman? Fourthly and finally, will he comment on further measures for creating a much needed level playing field between the renewable energy and the oil and gas sectors?
Baroness Noakes
My Lords, there is a temptation to see this Bill as one of those worthy Bills addressing climate change which deserves automatic and wholehearted support from all sides of the House. My speech today will not focus on the aims of the Bill or its role in the war on carbon emissions, but I associate myself wholeheartedly with the comments made by my noble friend Lord Lawson of Blaby. Rather, I shall seek to put the Bill in its context as a potentially dangerous example of policy changes being allowed to sleepwalk through Parliament with little or no supporting information. I very much hope that your Lordships' House will not allow this to happen simply on the basis that the ends appear to justify the means.
I shall start with Chapter 4 of Part 1, which enables something that is not named in the Bill—namely, the new energy company obligation. This can in due course be used to oblige energy suppliers to meet the costs of energy efficiency improvements for vulnerable customers and homes that are costly to insulate. We learn this from the Explanatory Notes, not from the Bill, because the clauses in the Bill comprise a long list of new powers which can be used to force the energy companies to do a huge and uncertain range of things in the name of carbon reduction targets and home heating reduction targets.
I will make one preliminary point about the energy company obligation—it applies to virtually the whole of the Government’s approach to climate change policies, including last week’s announcement on reforming the electricity market: climate change policies have a big price tag. The costs imposed on the energy sector in the name of climate change are borne by consumers, not shareholders or taxpayers. But consumers have never been engaged in an honest debate about whether it is what they want. When consumers wake up to the costly facts of climate change policies, they may well command much less support than the Government are taking for granted.
We have no idea what the energy company obligation could involve in terms of costs, because no scheme has been costed or even worked out. The impact assessments for the Bill say that the costs could be substantial, but the assessments contain not a single figure for the new obligation. Instead, we are told that costings will be produced to support the secondary legislation which will be needed to implement the obligation. And so, with breathtaking arrogance, the Department of Energy and Climate Change is taking powers to impose costly energy company obligations on the energy sector, and hence on consumers, without having the grace to give Parliament any details of the scheme which will be introduced and its costs. Parliament is being invited to write a blank cheque which will inevitably be met by energy consumers, who have no say in this. The only safeguards are the minimal procedures which accompany secondary legislation.
It is quite normal when major enabling powers of this nature are taken by a Government for them to bring drafts of the first statutory instruments in time for them to be considered in Committee. In that way, Parliament satisfies itself about the way in which the powers are intended to be used, and it can consider, for example, whether additional safeguards are required in the Bill.
Can my noble friend the Minister set out the timetable that the Government intend for the implementation of this part of the Bill? Will any aspects of implementation be available for scrutiny by either your Lordships' House or another place before the Bill becomes law? I fear that I know the answer to this question, but it would be good to hear it from the Minister himself. The right approach would be for the House to refuse to pass Chapter 4 without further and better particulars and I hope that the Minister will not be relying on green goodwill to pass these broad and costly powers.
The costs that will flow from the energy company obligation will increase the energy bills of consumers and that, as my noble friend Lord Lawson has already pointed out, will exacerbate the problem of fuel poverty. Before this Bill, the Government's own estimates were that climate change policies could lead to household energy costs in 2020 being one third higher than they would otherwise have been, and this new obligation will increase that further.
The Government usually cite the number of households living in fuel poverty based on 2008 statistics and they have done that again in the regulatory impact assessments. They say that there were 4.5 million, of which 3.3 million relate to England. But the department’s own Fuel Poverty Advisory Group in its latest report issued this year estimates that there were 4.6 million people in 2010 in fuel poverty in England alone. If we extrapolate that across the whole of the United Kingdom, we are talking about something like 6.3 million households in fuel poverty now.
The Minister knows that there are statutory targets set by the previous Government to eradicate fuel poverty by 2016. The target was challenging when it was set. It is certainly no easier now given that we are living in a post-recessionary world, with spending cuts and tax rises that I support because they have to deal with the economic mess that our Government inherited. But they will depress household income and will make it likely that fuel poverty will continue to rise.
When we debated climate change last month, I asked the Minister whether the Government stuck by that statutory commitment to eliminate fuel poverty by 2015. I did not get an answer then, but the Minister has another opportunity to answer today. Will the Minister give the Government’s estimates for the years running up to 2016 of the numbers that the Government expect to be in fuel poverty? Will he say precisely what impact this Bill is expected to have in that period and how increased energy costs will interact with the energy efficiency measures in the Bill? I hope that he will also cover the important and interesting point made by the noble Lord, Lord Giddens, in relation to the Jevons paradox, if I have that right.
I turn to other aspects of the Bill. I support the aims of the Green Deal, which is an imaginative way of harnessing the desires of many to improve the energy efficiency of their homes. Again, we hit the problem that this Bill does not give sufficient detail to evaluate the scheme for which we are invited to give legislative approval.
The impact assessment gives only illustrative scenarios, which taking the extreme of the high-cost estimate and the low-benefit scenario, indicate such a marginal gain that it might not be worth pursuing. Again, we have to await detailed secondary legislation to find out what will be involved. Again, I ask my noble friend whether he will set out the timetable for bringing before Parliament the detail of the scheme that your Lordships’ House will, I hope, be able to consider. Will the timetable allow us to consider it before the Bill completes its passage in both Houses or will we have to wait until secondary legislation appears? The House will know that our conventions in relation to secondary legislation in effect cede control to the Executive for the content of such legislation. I regret that for this Bill.
The Green Deal may well be a very good deal for a consumer who initiates the energy efficiency works and the related finance. I am sure that it will work for many long-term owner-occupiers. But I have very real concerns for the practical difficulties down the line when properties are sold or let, possibly several times in succession before the initial financing is repaid. Will we see properties burdened by Green Deal loans providing a drag on the property market at the bottom end? How will the disclosure arrangements work in practice? How will all of this interact with potential consumer defaults?
I have concerns about the Green Deal and how it will work in practice, but I have even more concerns about the proposals for the private rented sector. I fully appreciate the need for energy efficiency incentives to operate in the rented sector, for the reasons given by other noble Lords today, but we must be wary of driving landlords and properties out of that sector. In today’s environment, home ownership is not as easily available and will not be for some time, so the private rented sector will be particularly important. For that reason, I very much support the requirements in Clauses 37 and 50 that any arrangements introduced under the powers in the Bill for the private rented sector must not diminish the stock of private rented housing. But there are many problems and pitfalls for the private rented sector, and the prospect of compulsion fills many in the sector with horror.
As with other areas of the Bill, the clauses set out an enormous range of powers and penalties, but with no indication of how they might be used. Accordingly, the impact assessment ducks out of giving any figures or costs. It is a fair working assumption that if the powers are invoked the costs falling on the private rented sector could be significant. We are told that the way forward on these powers will not be considered until the impact of the Green Deal is evaluated and that these wide-ranging powers will not be brought in for several years—possibly 2015. It is clearly premature to include them in the Bill and we should challenge whether they should be allowed to remain here. When the Government have devised a scheme, consulted on it and costed it, they should return to Parliament with primary legislation to implement it. It is dangerous to parliamentary democracy to leave this kind of scheme to secondary legislation at some uncertain point in future.
This cuddly green bunny of a Bill conceals some of the most unsatisfactory aspects of legislation that we ever had to contend with from the previous Government. There are policies with zero detail and no timetable for the emergence of that detail; there are sweeping powers for the Executive, constrained only by the weak parliamentary safeguard of the affirmative procedure. There are virtually no details of costs or benefits for major parts of the Bill, where there are at best aspirational statements in support of them. I hate to say it to my own party on the Front Bench, but this is no way to govern.
Lord Hunt of Chesterton
My Lords, I welcome this Bill, which builds on the work of the Labour Government, who did many good things, but it needs some important amendments. I am an emeritus professor of climate modelling from University College and vice-president of Globe, which means meeting other legislators around the world. I worked in the CEGB once as a trade union branch secretary; I do not often claim that, but I thought that it might be relevant today. Subsequently, I was chairman of an environmental consultancy company. I am a capitalist, a trade unionist and an environmentalist, but I am not an economist, and I shall make some remarks about economics.
The global climate and the environment are changing faster than ever before in many thousands of years. Much of this is due to human effects. We are seeing this dramatically in the reduction in the amount of ice and of forests, and we are seeing huge variability of temperature and precipitation around the world. The world’s climate is a very complex process. I remind noble Lords of a very far-sighted speech made in the House of Lords in 1853 on the importance of studying the Gulf Stream and its effects, which led to the setting up of the Met Office. Some Members of this House are definitely 150 years ahead of the times, while others are about 150 years behind the times, as they cannot understand some of the physics of the 1850s. But that is the variability of this House. The important point is that variability in climate is leading in some parts of the world to really dramatic and dreadful changes in the environment, and the consequences on people.
Europe’s climate is in a curious part of the world, which is mild for much of the time but with a small change can become like Labrador, as we have been seeing. In the summer, of course, we sometimes have huge heat-waves from Russia. An interesting point about climate change is that we are likely to have more of this variability in future. Our policies for planning and housing must therefore be comprehensive and imaginative enough to deal with this full range of likely impacts, both cold—which many people have been talking about—and heat.
The global emissions of greenhouse gases that are causing much of this change are increasing despite the wish and aim to reduce them. China’s greenhouse gas emissions are increasing by a factor of two by 2050, although China is becoming considerably more efficient. If it were not, those emissions might increase by a factor of three, as noble colleagues have mentioned. The International Energy Agency recently commented that emissions around the world are expected to have a three or four-degree temperature rise, which was implicitly endorsed at Cancun.
Nevertheless, unless the countries of the world have a policy of reducing emissions, we could get into even worse situations. The UK’s contribution is therefore important. The UK’s plan to reduce its total emissions by 80 per cent by 2050 was ambitious, and I agree a little with the noble Lord, Lord Lawson: if other countries are not making anything like that reduction, we might need to look at that in this period. However, we currently have a goal and we should stick to it.
The Bill is welcome because it provides measures not only for energy, which I will come back to, but for conservation through housing. I did not mention that I was once a city councillor in Cambridge in the early 1970s. I went to a conference in Germany, where I saw houses. Whether they were the erste, zweite or dritte classes of Sozialwohnungen, they all had much better insulation and windows than anything in Britain. Why do we have such poor housing in Britain? The economists and the Treasury did not allow local authorities to build the kind of houses that they were building in Germany. I hope that the Treasury has changed its entire heart through the Bill and will finally allow British people to have decently insulated houses. It is because of this Treasury-driven lack of insulation that we have the illness and problems we have now. That was not a very clever piece of foresight for the National Health Service.
Under the Bill, we will have a system in which you can examine houses with advice and assessors. They can look at the insulation and the heating system. It is important that the heating and insulation must also be related to the ventilation. We have had some discussions about this. I ask the Minister whether the funding will also enable houses to have more modern and appropriate window ventilation. The ventilation must of course be suitable for very hot conditions.
A particularly difficult point is that a large quantity of our public housing is on flood plains. Flood plains are of course cheap areas in which to build houses. Some are on coasts, where they have driving rain. Flooding is a great difficulty. In Bracknell, where the Met Office used to be, council houses were flooded every two to three years. Of course, this has a devastating effect if you have insulation in the walls. I was talking to my son-in-law this morning, who knows these things, and I gather that there are special ways of insulating houses with tiny balls rather than insulation material. That way, if there is flooding, it does not devastate the insulation system. These are the kinds of things that the Government must consider. They will need very good assessors to do that.
The Green Deal will not work unless we have extremely good and high-level training. We need centres of information all around the country. We discussed this again in a pre-meeting that the Minister kindly arranged. This must happen through local colleges of technology and community colleges so that people can be trained and get information from there. This will be the centre in which this essentially domestic revolution develops.
I have mentioned social housing, which is one very good way of introducing energy efficiency through district heating. I spoke to the Greater London Authority yesterday. It has a system of what it calls low-carbon district heating, in which there are considerable economies. You can also use other technologies. For example, heat pumps could be used for such purposes. One of the reasons why power companies have found it difficult to work with the planning and local authorities on these matters is that, if they install a combined power and heating or cooling system in housing, this will not be guaranteed over periods of 20 or 30 years. Some element of the Bill should meet that objective.
The Bill goes on to deal with the question of nuclear waste. Further to the boasting—if that is not an unparliamentary word to use in this House—of the noble Lord, Lord Lawson, we may have had a policy since the 1980s but, as a result of it and as others have said, we do not have a leading nuclear industry, a leading wind industry or some other things. During this period we did not make the investments that we needed to. The Government are now taking forward nuclear, and the conversion of the Secretary of State in this direction is a welcome development in current British politics. One of the important points is that decommissioning is part of this policy.
I was in China in early November. China is now thinking about sourcing its nuclear—if you can imagine it—from sea water. The Japanese now have a system of producing uranium from sea water at $200 a kilo, compared to $80 a kilo from mining, which may be revolutionary. However, even if you do that, you will still have waste. Therefore, in China there are also very advanced systems of thinking about hybrid methods of fusion and fission to deal with the waste. In 20 years the technology will certainly change in China, which is an important part of looking forward. We should not freeze in legislation a particular technology.
Finally, in Part 4 of the Bill there is a point that was not made in the Minister’s introduction. This is a Bill to empower and, we hope, use more effectively the knowledge and know-how of the Coal Authority. As far as I am aware, the Coal Authority has considerable land holdings, some of which I have seen near Stoke. Some of these are on hilly terrain, which could be well used for wind energy. I am pleased that the Bill includes the idea that the authority will become more innovative in using its resources. In the Netherlands, one of the most progressive and important parts of the economy is the company Dutch State Mines, which has done exactly the same sort of thing. It used to own the old mining areas and has turned into a world-leading company. Maybe that will be one of the interesting developments from the Bill.
Lord Reay
My Lords, the main purpose of the Bill is to introduce the Government’s so-called Green Deal, which they believe will,
“revolutionise the energy efficiency of British properties”.
We shall see. Why should it work? After all, we have had—and for the time being, at least, still have—CERT, CESP and Warm Front, yet we still seem to need the Green Deal. It is highly complex, requiring enormous new administrative effort, with advisers and installers to be accredited on a nationwide basis; Green Deal providers to be licensed by the Office of Fair Trading under the Consumer Credit Act and regulated by Ofgem; and the electricity suppliers also to be involved. There are four different categories of participant to be supervised, although some big energy companies may aspire to combine several of those functions, which could bring its own problems, as the noble Lord, Lord Teverson, said earlier.
One problem that has been found with schemes such as this in the past is that installers charge more for work done under the scheme than they do for the same work done outside it. That of course deters take-up. Consumers will therefore have to be satisfied that they are getting value for money and not paying excessive interest rates on their loans. But even if the take-up was satisfactory in the eyes of the Government, the effect on CO2 emission reduction might be negligible, although ostensibly that is the scheme's purpose, for to the extent that consumers choose to live in warmer homes, rather than use less energy, CO2 emissions are not saved. At moments the Government seem to acknowledge that this might happen, although without acknowledging the implications. Page 15 of DECC's admirably clear 20-page executive summary of the proposals in the Green Deal states that the energy company obligation will,
“help the most vulnerable low income households, who tend to under-heat their homes, to heat their properties adequately and more affordably”.
That is a positive result in terms of human happiness but does not have much effect on carbon emissions.
The impulse behind the Bill is, presumably, the prospect of higher fuel prices, but here the greatest threat comes from government policies. Oil prices are indeed very likely at some point to spike upwards but oil plays only a small part overall in domestic heating, most home boilers being gas-fired. The outlook for gas prices and gas availability is very different. As my noble friend Lord Lawson of Blaby has explained, new technological breakthroughs made by the oil and gas industry in the United States, which, incidentally, were quite unforeseen, and not, unlike carbon capture and storage, counted by Governments as chickens before they hatched, have opened a new vista of plentiful gas on what has been described as a planetary scale. Even Lancashire might be going to make an important contribution to United Kingdom supplies. Nor is the prospect a very distant one. As my noble friend said, the United States is already in the process of overtaking Russia as the world's largest producer of natural gas. But, as I say, the greatest threat to energy prices, of course, comes from government policies.
The Government's obsession with renewable energy, and their determination to deliver vast subsidies to wind power in particular, promises us ever-rising fuel bills, on some calculations to double their current level, far into the future, pushing ever-more households into fuel poverty, and sending ever-more of our industry overseas. What can be the point of hoping to save on gas imports, as the Government state they aim to do on page 7 of the Green Deal summary, if the result of our choosing to have more expensive energy is that we have to import more goods instead?
Last week, I spotted a small crack in the liberal consensus. A discrete editorial on Friday in the Financial Times gave its opinion that the target of getting 30 per cent of our electricity from renewables was unnecessary as well as expensive and should be dropped; nuclear and renewables should be allowed to compete on level terms with no additional subsidy in the form of either ROCs or the feed-in tariff for renewables; and that the goal of policy should be European Union treaty change. I entirely agree with that view so far as it goes.
I appreciated very much the speech of the noble Lord, Lord McFall, with his call for realism in the energy debate and his references to the arresting speech made by Mr Rupert Soames recently in the Scottish Parliament. What I do not agree with is the proposal being circulated that the Bill should be amended to include local carbon budgets. We have only just managed to lose the regional renewable energy targets along with the regional development agencies, and a welcome riddance that was. Local carbon budgets would just result in—would be designed to result in—the further disfigurement of the countryside with gigantic wind turbines and their attendant pylons, to the further impoverishment of the consumer and of the country.
We have seen several Governments recently cutting back drastically on their renewable energy subsidies. That is the route that I would like us to follow, relieving pressure on households and industry, and giving economic growth a chance. For goodness’ sake, let us start to do that before it is too late.
Lord Judd
My Lords, on listening to this interesting debate, one of the things that I am sad about is that we do not give a higher priority to conservation. We seem to take it as given that we will continue to be a society that expects the easy availability of energy. It is in education, to which my noble friend Lord Hunt referred, that it is crucial to give priority also to conservation and preparing the professionals, not least those in engineering, to make a success of conservation.
Urgency has been underlined by the Chief Medical Officer. He has put on record his view that people living in poorly heated housing are in greater danger. All badly insulated properties, he has stated, offer significantly less protection against the risks of cold than more modern and warmer dwellings. People living in privately rented homes are more than four times more likely to be living in a cold home than people living in socially rented homes. As we have been reminded, the private-rented sector has a greater proportion of the most energy-inefficient homes—those in energy performance certificate band G. There are twice as many in that sector than in other sectors. It is absolutely essential to drive up, without delay, standards of energy efficiency in the private-rented sector. If the Bill convincingly meets this priority, it is obviously to be welcomed, but its proposals will need to be carefully scrutinised to be certain of their speedy effectiveness.
The Government are right to recognise that the days of our highly liberal energy market—one of the most liberal in the world—are numbered. However, my anxiety is that the Bill’s proposals do not go far enough and will at best ensure a slow incremental improvement. The issue is far more immediate than that. How will it be in the interest of a handful of dominant energy companies and their shareholders radically to change the existing order? Surely an increase in the energy efficiency of buildings will undermine a company’s sales and profits. The real challenge is to cut energy demand.
I draw the attention of noble Lords to an interesting article by Professor Catherine Mitchell of Exeter University in a recent edition of the Guardian. She asked:
“So what’s the answer? We need regulated obligations on the scale of the transition from town gas to natural gas. Tendering for street-by-street or area-by-area contracts to make homes energy efficient is cost effective, but crucially creates a mechanism for new companies to enter the market, thereby potentially diluting the dominance of the current energy companies”.
She then sensibly asks whether this can really work or whether it is just idealistic nonsense. She recalls that she,
“lived in Brixton during the riots of the 1980s”,
and reminds us that the,
“subsequent Scarman Report identified poor housing as an important factor. It recommended creating Aim areas (Areas for Improvement and Modernisation), which were subsequently put in place by the Greater London Council”.
The result was that areas were,
“systematically brought up to a decent standard”.
The evidence is there that it can be done. Why do we always avoid the strategic need to do it?
At this point, I declare an interest as president of Friends of the Lake District and as a vice-president of the Campaign for National Parks. The Government are, in my view, to be commended for having resolved the issue of local authorities not being able to sell electricity that they generate from renewable sources by making a change, through secondary legislation, to Section 11(3) of the Local Government (Miscellaneous Provisions) Act 1976. Local authorities can now generate electricity from renewable energy and sell it. However, national park authorities and the Broads Authority, although part of the local government framework, are not covered by Section 11 of the 1976 Act and therefore did not benefit from the legislative change. Their understanding is that they still cannot generate or sell such electricity. Will the noble Lord reassure us that this will be put right? Could this not be covered by a new clause in Part 3 of the Bill, after Clause 99? The objective of putting the national parks and the Broads Authority alongside the rest of local government could be achieved by amending Section 11 of the 1976 Act.
The national park authorities are working hard with partners and local communities to address climate change. One aspect of this is providing leadership on low-carbon innovation in national park communities while reducing greenhouse gas emissions from their own activities. An important part of this can be the installation of renewable energy measures, for example through photovoltaic roof panels on NPA buildings or small-scale hydroelectric schemes in NPA grounds. However, as is the case for other local authorities, being able to receive financial assistance for projects will often be critical to getting renewable energy measures installed.
National parks are strategic environmental assets. They are indispensable to the health, and to the spiritual and psychological well-being, of the nation. They provide many public goods and generate vital revenue for regional economies. The Government's ambition to deliver a more sustainable and secure energy supply presents a number of challenges for them. It is clear that the future national energy portfolio will comprise a mix of sources of generation, and that some of these could have a significant impact on national parks. The Government's decision to remove Kirksanton and Braystones from their list of preferred sites for proposed nuclear plants is very welcome. However, plans for two other sites, Wylfa and Sellafield, will have major implications for Snowdonia and for the Lake District because of the extra transmission capacity that will be needed to transport the electricity that these plants will generate to centres of population, not to mention the huge adverse impact of the transport necessary for the construction itself.
The planned expansion of the national grid is causing disquiet in many parts of England. Last week, National Grid commendably launched a consultation on the undergrounding of power lines. I suspect that half of the Energy Minister's postbag is about power lines. It is good that he has welcomed the current study by the Institute of Environmental Science and Technology and KEMA Ltd into the cost of undergrounding. Surely it would be a commercial disaster for generators if their investment was at risk of becoming a stranded asset because of widespread public opposition to pylons. Some leadership from the Government is needed to prevent this from happening and to promote a joined-up approach. They have an opportunity to address this next year when they publish EN5, a national policy statement on electricity networks. This must surely include the strongest possible encouragement to National Grid to avoid areas designated for their national landscape importance. DECC and Ofgem must work together to establish the appropriate financial mechanisms to enable any new overhead lines in these special landscapes to be undergrounded.
National parks are rich in the natural resources that lie behind many renewable energy technologies. I think of wind, sun, water and tides. The development of these technologies is important not only from the point of view of generation, which is vital, but also because such projects can raise public awareness of the importance of green energy. However, the scale and location of such developments will be a key factor, given the sensitivity of national park landscapes, to which the Government repeatedly and reassuringly tell us that they are completely committed.
Lord Lea of Crondall
My Lords, we are obviously having a broad debate on energy policy and I welcome that. One of the difficulties has been the rather disjointed way in which all the various announcements have been made. Those announcements must have been coincidental, because I cannot think that they were made as part of the planning. We had hugely important announcements last week about the electricity market regime, and a very important paper, Carbon Price Floor, was recently produced by the Treasury and HM Revenue and Customs. Ever since Rio in 1992, we have known that the trend in policy, including the Climate Change Bill and so on, has involved two or three different rationales for big price increases, and I want to come on to some of the social problems associated with that. I do not want to labour the point but I find it astonishing that we have this Bill dealing with important, as well as less important, matters relative to the hugely significant announcement that we need £110 billion of new generation by 2020. That is 10 years away, and you do not need to be Einstein to figure out that that is more than £10 billion a year. Talk about Heathrow Airport, the railways, the roads and so on! This is a much bigger deal if these figures are correct.
Although I agree to a large extent with the speech of the noble Lord, Lord Lawson of Blaby, and I greatly admire his analysis, I think that we have now entered a new narrative period, because the incentives for new investment seem to have fallen short of the supply requirements for energy security. The situation is a bit like that of Heathrow Airport. We were all astonished last week when it was seriously stated that Heathrow was running optimally, at 98 per cent of capacity. I have never heard such an absurd statement. However, it is a national problem and this, too, is a big national problem. I agree with the noble Lord, Lord Lawson, that we cannot have a sort of Gosplan for energy but I would say—and I do not know whether the noble Lord would agree—that we need a more holistic narrative than the highly disjointed one that we have at present.
The Treasury has come up with this framework for a carbon price floor and I want to ask the Minister one question. I hope that the noble Lord, Lord Marland, is not going to say, “Well, these are all questions outside the scope of the Bill. My job is to get the Bill through. I am not interested in any other questions”, which I think could be his reply. He has indicated that it will be. I thank him but I am not going to sit down; I am going to continue my speech. You cannot have a carbon price floor in Britain without a number of questions arising about a price floor across Europe or any other price floor. I should like to ask him a question and, if he does not want to reply today, I am sure that the department will be able to write plenty of letters, provided that the Treasury agrees with Chris Huhne’s department. I am not trying to be nasty about this. Both Secretaries of State are wonderful people working in co-operation at the moment. However, I think that we need a wider view about the context of this carbon price floor.
It seems to me that there are three different rationales for this 30 per cent price increase, announced last week, by 2020—which, surprise, surprise, is the same year as the £110 billion should have been spent. One rationale for the price increase probably has something to do with finding £110 billion, but we do not think that a big percentage of the £110 billion will come from price increases.
Lord Lawson of Blaby
I was very interested to hear the noble Lord’s remarks on my intervention. Does he not recall that in the Treasury document to which he referred the rise in the wholesale price of electricity is projected as being between 68 per cent and 88 per cent?
Lord Lea of Crondall
Let me take that as a base from which to throw in my next suggestion. That is that these numbers are baffling to most people. I was in the middle of saying that there are three possible rationales for a 30 per cent price increase. One of them on the face of it has nothing to do with the £110 billion; it is to do with restricting consumption in line with the climate change targets. However, there is no ownership by the British people in the pubs or the HGVs that that is the price that they are to pay.
I had a debate with my noble friend Lord Rooker when the Climate Change Bill was going through three years ago. I had tabled an amendment that there be introduced a carbon tax industrial and consumer impact forum. Its role would have been to look at, first, the impact of increases in carbon taxes or other such taxes; secondly, the changes in relative costs between different sectors of the economy; and, thirdly, the role of the European globalisation adjustment fund, because those are big industrial structural adjustments. I said that the forum should include representatives from HMG, employers, trade unions and consumer organisations—I subsumed the Met Office and others in HMG. It would produce a report each budgetary period on the impact of all the things I mentioned.
Let me deal with one in particular, which was the real purpose of my amendment. If we are to get ownership of price increases, we need two things. One is a forum where representatives of consumers, trade unions and everyone else sit around the table looking at the energy framework. The second is that we need a degree of hypothecation of the money coming in. I think that the Treasury has stuck its toe into the water for the first time on hypothecation—just as my noble friend Lord Prescott did with the arguments about congestion charging. All the money raised from the Rolls-Royce going along Piccadilly is going to buses. People might start to understand if there were what I might call a hypothetical hypothecation, by which I mean that it would not be separate from the Budget Statement but there must be an understanding of who is paying what, where the money is coming from and why.
The third possible rationale for a 30 per cent price increase is to do with paying for things such as the Green Deal. None of these things come without a price tag attached.
When the House authorities consider what amendments are allowable on the Bill—my noble friend Lady Smith of Basildon will no doubt give me a steer on this—we need to test what amendments we can table to the Bill. Since the Bill has been published, we have had all these announcements of huge importance right in the territory of the Bill. We must look at that.
At minute 10, I shall make two final points. One is to say that, given the regressive nature of price increases on something as basic as electricity, there will be great social unrest unless we do some redistribution. There will, of course, be squeals from big industry about its competitive position, but we need a frank debate. We cannot just look separately at an argument about winter fuel payments. These are huge, important questions, and we need a holistic narrative which would include homes. I agree with the noble Lord, Lord Best, about blocks of flats which form a not-inconsiderable part of big cities such as London. I have been chairman of my residents’ association for a number of years. We have 99-year leases like many people. If you want to say to an individual, “Do this to your ceiling”, “Do this to your loft”, “Do this to your walls”, or “Do, this to your floors”, the managing agent will say, “No, you can’t play around with the building like that”. So even if the residents’ association wants to do something, the managing agent, on behalf of the ground landlord, can say, “I don’t agree”. There is a prima facie question along the lines posed by the noble Lord, Lord Best, and one or two others.
I take this opportunity to say that I am glad that the noble Lord, Lord Lawson, put in his usual plea for us not to rely on base load from wind power. It is not a joke any more. It is a fantasy, and we ought to recognise that. I also take this opportunity to congratulate the noble Baroness, Lady Noakes, with whom I almost always try to agree. However, on this occasion, her worry about what she calls the consumer is the same, essentially, as what you might call the social policy dimension as a whole. Again, we just have to test what amendments are going to be allowed in the course of the Committee stage on this Bill.
Earl Cathcart
My Lords, like other noble Lords, I have received a plethora of briefings from various organisations raising numerous points on this Bill, but I want to concentrate my remarks on a different area altogether.
Last summer, Chris Huhne, the Secretary of State, said:
“The cheapest way of closing the gap between energy demand and supply is to cut energy use”.—[Official Report, Commons, 27/7/10; col. 867.]
Quite so. The Green Deal, which will allow households and businesses to improve their energy efficiency with no up-front costs, will help reduce the demand for energy consumption. This must be a good thing, whether or not one believes in global warming, subject of course to the paradox of the philosopher mentioned by the noble Lord, Lord Giddens.
However, the Green Deal comes at a time when energy prices are already on the increase. If last week’s newspapers are to be believed, average bills will rise by up to a further £500 per annum to pay for the new generation of environmentally friendly power stations, so the era of cheap energy is over. A spokeswoman from DECC said:
“If prices go up, it will mean more people in fuel poverty”.
Fuel poverty already stood at 4.5 million households in 2008 and, with the severe weather over the past two months, there is no doubt that it has risen again. My guess is that the figure will rise to over 6 million—a quarter of all households—but it may be even more, as indicated by my noble friend Lady Noakes.
However, there is a glimmer of hope. Following complaints that energy companies have recently increased their prices during this very cold weather, up popped Alistair Buchanan, the chief executive of Ofgem, on my television screen to say that protecting consumers is Ofgem’s first priority and that Ofgem would look into how the energy companies have been charging consumers. I thought that that was an excellent idea.
I also thought that I should look at my own bill a bit more carefully to see how I was being charged—I am ashamed to say that, until now, when I received my bill I just closed my eyes and signed the cheque. When I looked at my bill, I noticed that I was being charged in the day time nearly 30p for the first few hundred units used, after which the charge dropped to 13p. At night, I was charged a flat rate of 4.5p, regardless of the consumption. I have to admit that I am one of the 70 per cent of consumers who find the plethora of different tariffs utterly confusing, but I looked on the internet at other energy providers. It appears to be pretty standard that the first few hundred units used are expensive and that the more you use the cheaper the energy becomes. That seems totally illogical and rather defies the laws of demand and supply on how demand reacts to price change. The relationship should be the other way around. The more units I use, the more expensive per unit it should be.
Indeed, I would go further. Why do not the Government, through Ofgem, consider charging only a relatively small amount for the first few hundred units consumed and then increase the charge for the next few hundred units consumed and so on? The effect of ratcheting up the cost whenever more units consumed would have the advantage of encouraging all households to reduce their energy consumption and to endeavour to get all their consumption into the lower charging bands by taking up the undoubted advantages of the Green Deal and dropping to lower charge bands. That would encourage households to change the way in which they consume energy.
I then got my energy provider’s domestic energy price list for all the regions in Great Britain. I notice that there is a fixed daily charge, ranging from about 25p to more than 30p, depending on where one lives. Multiplying this up by 365 days means that households pay a fixed charge of between £91 and £111 per annum—that is even before they have consumed one unit of power. This is hardly helpful if one is in fuel poverty. Surely the fixed charge could be absorbed into the ratchet price structure that I described earlier.
Sadly, I do not expect Ofgem to get anywhere with the energy companies on my idea, as the energy companies will give any number of reasons why it cannot be implemented. Indeed, I can see one problem with my idea. Should a single person in a band-A property and a couple with two children in a band-D property receive the same number of units at the cheapest rate per unit? Obviously, the band-D property needs more energy and we do not want to penalise families. Why not allow the band-A property, say, 900 units at the cheapest rate and the band-D property, say, 1,200 units at the cheapest rate? It should not be difficult for energy companies to obtain the banding information for each of their customers.
I am sure that there are many other difficulties with the idea of ratcheting up the price of energy, but given that Ofgem’s first priority is protecting consumers I hope that the Government will feel that ratcheting up the price—so that the more you consume the more expensive it is—is worth exploring. I was delighted that my noble friend Lord Teverson also touched on this idea. I had thought that I might be a lone voice running down this rabbit hole. If we want to reduce the number of households in fuel poverty by lowering their energy consumption and bills, progressive charging together with the Green Deal might offer the necessary carrot and stick.
Before I finish, I should declare that I am a landlord in the private rental sector. This year, all my properties were double glazed and I think that they are all pretty well lagged. My first reaction to a tenant coming to me wanting to do the Green Deal on the basis of no upfront costs would be, “Excellent. Go for it”. However, I understand, especially after listening to the excellent speech of the noble Lord, Lord Best, that I might have been naive because there are problems in this area. No doubt I will have to get my mind around those problems before the Committee stage.
Lord O'Neill of Clackmannan
My Lords, this Bill could probably more accurately have been called the energy (miscellaneous provisions) Bill. That is the way the Scottish Office, in pre-devolution days when some of us worked in the Augean stables of Scottish legislation, would lump everything together and put the words “Misc. Provs.” after the subject. The Bill is a bit of a dog’s breakfast. It has some important parts and other bits that have been thrown in because it provides an opportunity to do so, and that is quite a legitimate thing. But the breadth of briefing we have already received tends to suggest that it is only the tip of the proverbial iceberg, because many more interested parties will be coming along when we get down to the fine print.
The Bill covers a new approach to home insulation with a novel payment arrangement and its consequent legislative changes. It also seeks to address the private rented sector, which the noble Earl, Lord Cathcart, just alluded to. I do not think that the sector will be susceptible to a single silver bullet. It will require a fusillade of other forms of armoury to deal with some of the problems. The Bill also seeks to address the question of security of supply, along with issues related to low-carbon generation. These are some of a number of issues, and this afternoon we have had a discussion about last week’s Green Paper on market reform. That will require legislation of its own at a later date, and it will be interesting to see how it can be accommodated.
Before I go further, I declare an interest as the paid chairman of the Nuclear Industry Association. Also, I am the unpaid president of Energy Action Scotland and the vice-president of National Energy Action, its English, Welsh and Northern Irish counterpart, which are fuel poverty charities. I am also doing some consultancy work with the Association of Plumbing and Heating Contractors on matters relating to the low-carbon heating of homes through insulation and the possibility of the kind of work that might come out of the Green Deal.
It is fair to say that the largest single part of the legislation relates to the Green Deal. In many respects it could be called paving legislation in that it prepares the way for this, but the noble Baroness, Lady Noakes—in a speech I was surprised to agree with so much—pointed out that unfortunately there is a fantastic lack of detail here. We are being asked to take on an interesting concept that has a number of downsides, which we may be exaggerating through ignorance. However, until such time as that ignorance is corrected it is quite reasonable for us to ask questions about people who have bad credit records, people in rented accommodation, and individuals on prepayment meters, who already face a number of prepayment charges before they actually start consuming any energy. The addition of another charge on them might well be the straw that breaks the camel’s back. That goes for a sizeable proportion, but not all, of those with prepayment meters, because a number of second-home owners have prepayment meters simply for convenience. However, poor and vulnerable households with prepayment meters, often in the private rented sector, face a number of problems.
The biggest problem is their inability to pay. They address the issue at times of the year like this by self-disconnecting. They stop paying. I am not sure how we can get round the question of having additional charges on top of the pre-payment arrangements that are already in place if we are going to be faced with variability in our climate and extreme changes of temperature, which could well happen over the 15 to 20 years we envisage for this payback.
I do not wish to scaremonger, but we need to know a lot more about the vulnerable groups of poor people who rarely have anything approaching the concept of the economic man or women in their minds. I remember visiting constituents who would, when they could afford it, have an electric oven on, with the door open, in order to try to warm a kitchen that did not have proper central heating or insulation. It was the economics of the madhouse, but it was the only way in which these poor folk could keep themselves and their children warm. Usually this was done with considerable danger to the family because of the open heater. I make this point because at the moment there will be a number of households across the UK who will be trying this make-do-and-mend approach to keeping their house warm.
In many respects the Green Deal is fine for the people who open the Sunday Telegraph or the Saturday Guardian in order to find the best way of spending their money on keeping warm—the folk who will go to Sainsbury’s because that is what people from their socioeconomic group do when they go shopping. However, the people who go to Lidl and the low-cost supermarkets will not be the most capable of, or interested in, dealing with such opportunities. It is unfortunate that Warm Zone and Warm Front are being set aside in the way that they are because there is a case for them.
There is a division in this House between the left and the right because some of us believe in planning and economies of scale; some of us recognise that individuals are not always the best basis for social amelioration or the improvement of our infrastructure. It makes sense to seek out economies of scale and I am concerned about that.
I am also concerned about the electricity company obligations. This is a misnomer because they are consumer obligations paid for by us as consumers. The energy companies merely act as agents and take in money to do a job that we pay for. At the moment, the environmental improvements—which most of us recognise as being necessary—amount to a kind of poll tax to the tune of £80 per household. This and the additional costs of a number of things in the Bill are going to be financed in much the same way and we need far greater reassurance on this.
I know that informally the Minister has indicated that he will do his best but we have to continue putting on the record that it is not enough for us to sign blank cheques in the form of secondary legislation, the definition and specifics of which we know little about at present. The social impact will be much greater on the most vulnerable households in our country than on many of us who can afford to pay the extra charges on our electricity and gas bills in order to do our bit to save the planet or set an example to the rest of the world. I make this point not because I want to see the scheme fail—in a number of areas and districts it will be a most attractive proposition—but because it would be wrong for us to assume that it is the only proposition that should be considered.
We have also in the Bill to consider the issue of security, particularly of gas supplies. In the last debate in which I spoke on this matter, I think I asked the noble Baroness, Lady Wilcox, to respond to this issue but we never got a real response. What I want to know is this. We are talking in terms of providing incentives. We know that we do not have enough by way of gas storage facilities, but it is surely incumbent on the Government to come to a conclusion on what would be a desirable objective for us to incentivise companies towards. We are not in the same position as France and Germany in terms of gas supply. Although we are net importers, we import on a far smaller scale than many other countries and we do not need the 80 or 90 days’ supply that they have. However, it would be useful if the Government could give an indication of what was needed, so that we could say that this level of incentive would be necessary only until we got to that level of gas reservoir and storage facilities. It is incumbent on the Government to give us some indication of that if we are to set in place a system of incentives or subsidies, call them what you will.
As I said, the Bill covers a number of elements and I should like to make one point on behalf of the members of the Nuclear Industry Association. We welcome the Government’s proposals in that section of the Bill. They are modest; in effect, they give legislative effect to the agreements that are arrived at after lengthy consultation with the appropriate parts of the nuclear industry. I put it on the record that the industry is happy with this. Obviously, the fine print will need some scrutiny but, if the agreements that were arrived at can be dealt with in the manner that is anticipated, I do not think that there will be any problem.
This Bill contains a number of innovative and imaginative approaches, but let us not forget that for a lot of people the saving of the planet is only a secondary consideration after keeping their homes and their families warm. We cannot afford to forget that. I want to see the planet saved and I am prepared for us to make sacrifices, but I do not think that the Government’s rather simplistic approach is likely to be either effective or socially just.
Baroness Smith of Basildon
My Lords, I have enjoyed this wide-ranging and interesting debate, with impressive contributions from many noble Lords who have recognised expertise, experience and real commitment on the issues before us. I look forward to working with your Lordships in Committee and at further stages of the Bill to ensure that amendments—suggestions were made by the noble Baronesses, Lady Finlay and Lady Parminter—are made to strengthen and improve the outcomes of the legislation.
I thank the Minister, who has been described as one of the “green-obsessed government Ministers”—a mantle that I think he might wear with some pride—for introducing what was called a,
“cuddly … bunny of a Bill”,
and for his willingness to be open, to engage and to discuss the Bill both inside and outside the Chamber. That is very welcome.
Probably on behalf of all your Lordships who have spoken, I also thank the many groups, organisations and individuals who have supplied briefings and information and who have been willing to enter into discussion. Their input has been invaluable and very welcome, as I am sure it will continue to be as we move through the Committee stage.
The noble Lord, Lord Grantchester, spoke of the broad provisions of the Bill. As the House is aware, we welcome the Bill and support its broad thrust. We welcome the principles both of energy efficiency and of energy security. Although we consider that there are significant weaknesses in the legislation that is brought before us today, I am confident that, with the commitment and expertise in your Lordships’ House and with the Minister’s willingness to engage, we can improve the Bill and send it to the other place knowing that your Lordships have made significant improvements.
I should like first to reinforce the points made by my noble friend Lord O’Neill and the noble Baroness, Lady Noakes—with whom I do not often agree on these issues. They were absolutely right to raise concerns about the use of secondary legislation. This Bill contains 54 individual provisions for delegated legislation. That is a substantial proportion of the Bill and the detail of how the essential provisions will operate. I appreciate that in many cases it is necessary to bring forward delegated legislation, and I welcome today’s report from the Delegated Powers and Regulatory Reform Committee which raises issues of parliamentary scrutiny, which we shall refer to and continue to debate in Committee. It may assist your Lordships if I ask the Minister to say whether, where possible, he can bring to the Committee drafts of statutory instruments when we are discussing the relevant clauses. I think that that would greatly help us in our deliberations.
In my comments today I shall deal mainly with Part 1 of the Bill, but I also want to refer to the comments that have been made on Part 2, particularly on energy security. My noble friends Lord McFall and Lord O'Neill both emphasised the strategic needs that the Bill is seeking to address, and I was particularly struck by my noble friend Lord McFall's comments on local response. I think it would be helpful to examine that approach further in Committee.
My noble friend Lord Hunt set the Bill into a policy context, and his examples of housing in Germany were particularly apt for us as we consider the Bill at the moment. My noble friend Lord Giddens made a very important point about how this fits into the wider government policy issues, on which we have recently had numerous debates in your Lordships' House. I think the only way in which the Jevons paradox which he mentioned can be addressed is by considering the Bill in the context of the other policy issues not only across the Department of Energy and Climate Change but across government. My noble friend Lord Lea made similar points about context.
The bulk of the Bill deals with the Green Deal. We strongly support the aim to reduce carbon by tackling energy efficiency in existing homes. However, we have concerns about how we can achieve these objectives, as well as concerns about what the Bill does not do. Those concerns have been expressed by the noble Lords, Lord Jenkin and Lord Teverson, and by my noble friend Lord Grantchester in his opening speech.
The scale of the challenge facing us is enormous: 27 per cent of the UK’s CO2 emissions come from energy use in homes. There is enormous potential to reduce. There are 26 million homes in Britain, half of which were built before the 1960s and 5 million of which are Victorian terraced properties. So for the industry to deliver the quantity of work needed there will need to be significant participation in the Green Deal. However, it is not yet clear that the incentives in terms of the carbon and financial costs and benefits to householders will be sufficient to drive up the level of participation. Business needs the confidence and the level of take-up to ensure that it can invest and guarantee the training and skills that are required. As noble Lords have said, another issue is the levels of interest rates, which are of great concern to consumers and installers alike. Without a low interest rate householders will be paying the full unsubsidised rate for measures such as cavity wall and loft insulation that were previously available at low or no cost under successive supplier obligations.
The Government's impact assessment is a weighty document but I have taken a more detailed look at how the Green Deal operates and will affect cavity wall insulation, which is one of the most cost-effective measures. In the assessment we find that the number of homes that will benefit from cavity wall insulation will reduce. In 2009, 560,000 homes benefited from the installation of cavity wall insulation; but in the following two years the number will increase to nearly three-quarters of a million. At the annual conference of the National Insulation Association earlier this month, the members were rightly optimistic about the figures for those two years and the potential for growing the business and taking on and training new staff. However, there was profound pessimism about the position from the time that the Green Deal begins in 2012. It is bitterly disappointing that, as they were gathering in a mood of great optimism, the Government published the Green Deal impact assessment with predictions for the number of cavity walls due to be insulated post-2012 as at least 40 per cent lower than those they expect to deliver in the next two years. The most optimistic figure in this document is for half a million in 2015, which is lower than the figure for 2009.
So, far from delivering the promised one-quarter of a million new jobs that the Secretary of State for Energy and Climate Change has heralded, the insulation industry—the part of the construction industry which is supposed to deliver the bulk of the Green Deal in its initial years—will be getting smaller rather than bigger. I am sure that that is not the intention. However, it appears even from the Government's own figures that they have no confidence that the Green Deal will deliver more insulation than has been delivered under existing arrangements. The Government's forecast is that it will be delivering less. The most optimistic scenario, even for existing homes which are not suitable for cavity wall insulation, is woefully inadequate.
If the Green Deal is to be as effective as we want it to be, there needs to be a higher take-up. Looking at how we achieve that has to be a priority in our Committee deliberations and we should examine what further measures can be taken. Examples could include earlier use of renewables and, as referred to by the noble Lord, Lord Hunt, ensuring that those undertaking the work and assessing installations are appropriately trained.
Perhaps I may also take up issues raised by noble Lords relating to the plight of the fuel poor. The Government have recognised that the pay-as-you-save element of the Green Deal is not appropriate for those households that are fuel poor, vulnerable to fuel poverty or financially disadvantaged. The latest data from Ofgem suggest that 2.5 million households are in debt to their energy supplier. How will they be able to access the Green Deal, which will increase their energy bills?
For those households which, because of the cost of energy, are the most likely to underheat their homes, the benefits of energy efficiency are in the form of a warmer and healthier living environment rather than in monetary savings. For obvious reasons, those households normally have a poor credit rating and may have existing debt problems. They cannot benefit financially from the Green Deal as they cannot fulfil the golden rule in financial terms, even though they benefit in better warmth. The noble Lords, Lord O’Neill and Lord Judd, raised the social and health costs of proceeding in this way. The people concerned are likely to be private sector tenants.
The new energy company obligation is the main mechanism for assisting disadvantaged households in improving heating and insulation. It will be the only source of assistance for those households following the swingeing cuts and the ending of the Warm Front scheme at the end of 2012-13. As I said in a previous debate on Warm Front, we will support any mechanism that effectively deals with this problem. The ECO could be effective, provided it meets certain criteria. We will work with the Minister to ensure that the scheme is sufficiently well funded and that a disproportionate share of resources is not diverted to households that are able to pay but live in hard-to-treat properties.
A great number of noble Lords, particularly the noble Lords, Lord Teverson and Lord Best, and the noble Earl, Lord Cathcart, raised concerns about the private rented sector. We will see little progress in the private rented sector for some time. The private rented sector accounts for around 14 per cent of the housing stock and has some of the most difficult-to-treat problems. It has a disproportionate number of homes with the worst energy rating that will cost in excess of the limits currently being suggested to improve.
The Government’s own Fuel Poverty Advisory Group calculated that 19 per cent of private tenants live in fuel poverty, and the impact assessment for the Bill shows that 42 per cent of those in the worst private sector properties are in fuel poverty. As the noble Lord, Lord Best, indicated, a substantial coalition of 30 organisations is calling for the Government to introduce a legal minimum standard of energy efficiency for private rented homes and for it to be an offence to re-let a property which does not meet this standard until it is improved. We do not want to see the private rented sector lose properties. There would have to be financial help, greater incentives and information for landlords to improve their properties.
We welcome the Government’s recognition that this is a serious problem, but I fear that the measures being brought forward are inadequate—they are not even guaranteed to come into force. Both landlords and tenants need certainty. The Minister was forceful on this matter in his opening comments, which I welcomed. However, under the Bill as it stands, there will be a review of the sector after a year of the Green Deal. Then, if take-up is not sufficient and it does not impact on the number of properties available to rent, the Secretary of State “may” make regulations to require private landlords to make improvements to their properties. It is almost a triple lock against action. The earliest date on which regulations could be made is April 2015, so we are years away from seeing any significant improvement in the private rented sector. Clearly, this is insufficient, and we offer the Minister our full co-operation in seeking to address the problems that exist here.
Perhaps I may mention local government—I declare an interest as another vice-president of the Local Government Association. I hope that we will be able to explore with the Minister the role of local government in supporting the Government’s objectives. We need to look further at both the practicality and the effectiveness of councils’ duty to enforce against landlords with low energy effectiveness. I welcome the commitment that the new duty will be funded by government, but there remains again a lack of clarity given that so much will be finalised in secondary legislation and not until after 2015.
It is very difficult for local authorities and landlords who do not know whether there will be a duty to act post-2015. Although it is not part of the Bill, the impact assessment states that the Government intend that F- and G-rated properties will be targeted and will give local authorities access to the EPC database. Councils will then have to use other data—for example, council tax information—to locate those properties that are privately rented and are rated F and G. There are concerns that about whether a fine is the appropriate remedy for a landlord who does not comply. The tenant will still be living in a home that is energy inefficient.
Many of the organisations seeking to improve the Bill are concerned that the powers here are too weak to ensure that landlords comply and that unless improvements are made we will see very little progress in the housing sector, which has the capacity to make the greatest difference.
If it helps the Minister, I can inform him that 39 per cent of F- and G-rated properties can be improved to band E for less than £1,500 and to improve all band F- and G-rated properties to a minimum of band E for private rented homes would take 150,000 homes out of fuel poverty. That is 25 per cent. Those are huge gains and a real opportunity for the Minister to make a substantial difference. I know that local government stands ready to work with him and assist in this.
We welcome the commitment to give consumers information on energy bills about the cheapest tariff. That should be meaningful information that assists the consumer. We welcome the proposal on smart meters. I have previously raised in debates in your Lordships' House the need for smart meters to be compatible and interoperable for all energy companies. When I raised that before the Minister agreed to look at it. If he is able to update the House it would be appreciated.
Noble Lords have raised a number of consumer protection issues that I feel will need greater clarity as the Bill progresses. I raised some of them with the Minister and his Bill team and I am grateful for their assurances that they will look into them. I know that the Minister is aware of the need for consumer confidence and trust in the energy sector for these proposals to work. The Minister will no doubt be aware that in October this year npower agreed to compensate nearly 2 million of its customers who were overcharged for gas in 2007 and paid around £70 million in compensation. That was after a campaign by the energy consumer advocate, Consumer Focus. Although it is not in the Bill, I hope that the Minister will take on board the importance of a strategic body to represent consumers and I hope that we can return to this issue again.
On the issue of the Coal Authority, I thank the Minister for bringing forward the provisions in the Bill. It is entirely appropriate that a body that is established by primary legislation should be changed only by primary legislation. He will be aware that this body, the Coal Authority, is also listed in Schedule 7 to the Public Bodies Bill. He may be aware that I have tabled an amendment to that Bill to delete the reference to the Coal Authority. Given that we now have the legislation before us quite rightly in this Bill, in the true spirit of Christmas will he support my amendment and perhaps get his ministerial colleagues to do likewise as the reference is no longer necessary?
Finally, I thank all those who contributed to the debate today. I am looking forward to the Committee as the clear will in the House on all sides is to ensure that the Bill achieves its stated objectives. I will not attempt to joke as my noble friend Lord Giddens was able do, but I wish the Minister and everyone who has taken part today a lovely Christmas and an enjoyable new year and I look forward to working with your Lordships on this Bill to make 2011 the year of warmer homes and energy efficient homes.
Lord Marland
My Lords, I thank all noble Lords for a wide-ranging debate and some very thought-provoking and some not quite so thought-provoking but none the less invaluable advice and comments. I will not go beyond the scope of the Bill, even though some of the advice and comments did, because this is a debate on the Energy Bill. I will therefore restrict my responses to that matter. We have had plenty of opportunity to debate in the past and will no doubt have plenty in the future and I am happy that we will debate the other issues that have been raised then.
For the purposes of this summing up, I will clarify that this is a framework Bill on which there is a lot of work to be done. I very much value the comments made by noble Lords. We have created the opportunity, which I am told is groundbreaking in this House, to hold breakfasts and discussions with noble Lords, to listen their views and to improve on them, and I shall continue to create those opportunities as the Bill progresses. That the Bill starts here is a good opportunity for us all to get it right, and to do so within the spirit of the Bill. I shall therefore deal with some of the broader issues that have been raised by noble Lords, take some of them together and refer to individual ones later. There have been, as noble Lords are aware, an awful lot of questions. In Committee, I shall pick up on those questions that have not been commented on, or I am very happy to correspond or discuss further with noble Lords.
The noble Lord, Lord Grantchester, raised the subject of consumer protection, as did the noble Lord, Lord Teverson, and others. It is fundamental that the consumer is protected in this whole endeavour. There are two risk areas—accreditation and assessment—and the best practices must be established.
Lord Lea of Crondall
The Minister said that he would discuss some broader points, but he is now on the narrower Bill points again. On this occasion, it is not acceptable—certainly to me—for him to say that he is just going to stick to the Bill when last week it was overtaken by events. The hugely important, historic announcements about electricity price restructuring and the carbon floor are relevant to this Bill; that is what we have all been talking about. It is an absurd use of parliamentary procedure to say, “My job is to get the Bill through. I don’t want to hear about anything else”. But that seems to be the Minister’s approach. There might be Front Bench agreement on this all being a love affair, but it is a greatly missed opportunity. I would ask the Minister to think again, to discuss the matter with the Treasury and Chris Huhne and to find out whether it is really sensible, given last week’s announcements, which have hijacked this Bill, to go on as if nothing has happened.
Lord Marland
Well, thank you for those very unnecessarily hostile remarks. Obviously, the noble Lord has been deaf to anything that I said at the start of this wind-up. I notice that he was one of the few who has not attended any of the opportunities to have briefings or discussions on this document, and chooses to take up our time on this particular issue, which is not relevant to this Bill. If he wishes to discuss things outside the context of this Bill—as I said earlier, and I shall repeat it, if he would not mind listening—he is entitled to do so, and he is entitled to ask for a debate on it himself. As I said earlier, we are perfectly happy to do that.
If I may, I shall go back to the substantive issues on the Bill. A lot of time has been taken up in this House in the past few days, and I think that people want to get on to other things in their life. To say that I have been unnecessary and not listening is a most unfair remark.
As I think I said, consumer protection is at the heart of this. The OFT will be fundamental to ensuring that best practice carries on, and through the Committee stage we shall enjoy noble Lords’ support. I was grateful to the noble Lord, Lord Best, and others in what they said on the rented sector, and the encouraging words coming from the associations that he mentioned. The noble Lord, Lord Teverson, and the noble Earl, Lord Cathcart, and the noble Baroness, Lady Noakes, also referred to that matter. Clearly, we want to encourage the rented sector to embark on this and embrace it with open arms. The noble Lord, Lord Best, suggests that it will do; clearly, if it does not want to utilise the market practices, we will have to review the provisions in 12 months and then we will have to use powers to ensure that it does. Cracking that is one of the most difficult areas of the Green Deal.
The local authorities issue mentioned by the noble Baroness, Lady Maddock, the noble Lord, Lord Teverson, and others, is largely a matter for the Localism Bill, which involves authorities going back to the local authorities and enhanced authorities. It is to their benefit to do something like that. They have a number of incentives to do this through carbon-reducing programmes that they have to adopt through government best practice. That in itself should be an incentive.
Fuel poverty, one of the biggest issues with which the Government currently have to grapple, was raised by the noble Lords, Lord McFall and Lord Lawson, and others. It is a critical issue. Clearly, there are a number of measures. Fuel poverty has exponentially increased year on year since 2004. We must reverse that trend. The Green Deal is part of the attempt to do so, along with all the other measures that I mentioned in my opening speech and, of course, the warm home discount, which will provide £250 million, rising to £310 million by 2015, to encourage people out of fuel poverty. As your Lordships know, we are going to conduct a review of fuel poverty to get into the detail and solve this terrible trend for those in great difficulty.
Incentives were mentioned by a number of noble Lords. There are incentive schemes. This is a free-market programme so the incentives will come from within the market. The noble Baroness, Lady Parminter, will know that councils have the opportunity to incentivise programmes through 60 schemes. We will be looking forward to them doing so.
The noble Baroness, Lady Parminter, also mentioned a level playing field, as did the noble Lord, Lord Grantchester. Through all our energy and endeavours, we are trying to get competitiveness into the market so that we can establish a level playing field. That is fundamental to this programme.
The noble Lord, Lord Jenkin, raised, among other things, Warm Front and how it interacts with the Green Deal. I am delighted to say that Warm Front has been fully subscribed early in the current year with the money that was made available. In 2011-12 £110 million will be available and a further £100 million in 2012-13. During that time, the Green Deal will have fed in and been excellent in its support of the Warm Front which, as I have said many times, was a good attempt at combating fuel poverty but has not worked in itself. We must grapple and deal with that.
The noble Lords, Lord Cathcart and Lord Teverson, talked about their energy bills and the reverse cost thereof. I undertake to review this during this process because it is an extremely good, fundamental point.
On specific points, the noble Lord, Lord Grantchester, said that there was a cap of £6,500. There is no cap. The golden rule will in itself impose a restriction on the amount that the house can utilise. He also asked a reasonable question about interest rates. We obviously have no control over interest rates, but are developing a model and will, through Committee, have developed a model into which we can build interest rates.
I am afraid that noble Lords would not expect me to have an answer on the timeframes of the second Energy Bill. Getting a timeframe for any Bills at the moment seems quite difficult. I thank noble Lords for their support in getting us to where we are today.
Lord O'Neill of Clackmannan
The Minister has gone some way to answering our concerns about the cash limits and the amount of money. Can he confirm that boilers can be part of the Green Deal, or are we talking almost exclusively about insulation measures?
Lord Marland
The golden rule is that it generates energy efficiency. It is not intended, as I understand it, that boilers are part of that. Boilers were part of Warm Front, so there has been a lot of activity in that regard.
The noble Lord, Lord Grantchester, refers to deep geothermal, as do, unsurprisingly, the noble Lord, Lord Teverson, and others. We are exploring a licensing scheme as we speak. I hope to return to that subject in Committee. It is a very valuable and useful way forward.
The noble Lord, Lord Teverson, raised the issue of water. We will support the reduction of leaking, provided it can be demonstrated that it reduces the energy cost to the household. He mentioned issues relating to the accreditation framework, as did the noble Lord, Lord Grantchester. I think I dealt with several of those but the devil will be in the detail. With their permission, I hope we will go through that quite extensively in Committee.
The noble Baroness, Lady Finlay of Llandaff, offered the very good suggestion of an alarm system, which I will take away and consider as a valuable issue. I am grateful for her support on that.
My noble friend Lord Jenkin of Roding raised several points. First, who pays for the assessment? This is a market-led endeavour. We would expect a lot of it to fall within the promotional incentive of the people who are going to supply it. The most important thing is that the Government support those who are needy and cannot pay for it themselves. That will be done through an ECO or other function. I am glad my noble friend also mentioned EPCs because I have instigated a review of these. I would like to keep my powder dry until the review is finished. However, by the time we go through the Committee stage, we should have had the full review. I will give further details of that as it goes on. EPCs clearly need a great deal of looking at to make sure that they are fit for purpose. Who bears the cost of a consumer default? A consultation process on that is going on at the moment. It may live with the providers of the Green Deal or the energy companies themselves.
I agree with the noble Lord, Lord O’Neill, that we have not had a big initiative on gas storage due to factors I mentioned previously. To slightly embarrassingly blow my own trumpet, I signed the planning permission for a 15 per cent increase in the nation’s gas storage, which had been sitting around waiting for a new Government. We have taken keen action on that, which we need to increase, although it is not our primary concern because we have the most sophisticated terminals in the country for receiving gas. They are also the most flexible, so we can get gas from various supporting operations. Twenty per cent of our supply still comes from a Norwegian network and we still have a diminishing 50 per cent here in the UK.
The noble Lord, Lord McFall, posed the question of how Rupert Soames would like to be remembered. As he is a friend of mine, I feel he would like to be remembered as the CEO of a business that got into the FTSE 100 and generated great employment not only in Scotland but in England. In fine Churchillian tradition, he has achieved a great deal.
We seek to reform planning, which the noble Lord, Lord Hunt, referred to, by bringing more direct control—and therefore quicker decision-making—over such matters as onshore and offshore wind back into the ministerial department so that they can then be dealt with quickly and efficiently.
The noble Baroness, Lady Maddock, referred to HECA, which came from a Bill that she triumphantly took through the Commons in 1995, although she no doubt worked on it for some time before that. HECA was indeed a very good measure that served a great deal of purpose. However, time has moved on dramatically in this area and there has been much consultation on the subject. The consultation carried out in 2007 indicated that a change was very much on the cards. I am grateful for the support of the noble Baroness and for her advice on consulting various people, including ACE. I understand that ACE feels comfortable that our proposals will be a good follow-on to the great work that she carried out, for which we all owe her a great deal.
The noble Lord, Lord Giddens, fed me some interesting stuff. We all learnt about the Jevons paradox—apart from the noble Lord, Lord Lawson, who explained the point to me while sitting beside me, for which I am very grateful—which my officials tell me we take very seriously. However, as I had not heard of the paradox beforehand, noble Lords will not have expected me to know that. We build in a substantial discount for estimated energy savings from energy efficiency in all our impact assessments to account for increased consumption. Nevertheless, significant net savings still occur even with this conservative assumption.
Job creation, new jobs, net jobs and the renaissance of our manufacturing industry, which the noble Lord, Lord Giddens, and the noble Lord, Lord Hunt of Chesterton, raised, are absolutely fundamental. We believe that 100,000 new jobs will be created through the installation industry. That will appeal to the noble Lord, Lord Giddens, as an economist.
Lord Giddens
It is important to consider that one is talking about net new jobs. Just talking about creating jobs is not good enough, because the act of creating new jobs often destroys old ones. We must carry out an analysis of that.
Lord Marland
I totally agree. New jobs are created by new productivity. Clearly, there is a shortage in the building trade at the moment so I did not say that there would be 100,000 new net jobs. Obviously, if the building industry takes off at the same time as the home installation or Green Deal activity, new net jobs will be created.
However, net new jobs will be created by the £60 million of technological support that we are giving to the offshore wind industry. Four companies—GE, Siemens, Gamesa and Mitsubishi—have already agreed to sign up to a contract to start manufacturing in the UK, and we have been talking to others. That will create not only £300 million worth of new investment but new jobs.
The noble Baroness, Lady Parminter, talked about the need for an ombudsman, annual reports and targets. Those are very good points. It is important that we have an assessor for the accreditation scheme. I will take those very good points away and discuss them with officials.
The noble Baronesses, Lady Noakes and Lady Smith of Basildon, talked about the Bill’s timetable. I am no expert on timetables as I am a self-confessed virgin in taking Bills through the Lords, or any Parliament for that matter. It will not be possible to have 54 delegated powers draft SIs beforehand, but I shall be happy to explain the timetable and the powers that we are taking over the next few weeks. I am also happy to discuss the timetable with the noble Baroness, Lady Noakes, outside of that. We are committed to ongoing consultation on a lot of issues. In Committee there will be more detail about the consultation. We will consult formally on most of the SIs at the end of 2011 before introducing them in 2012. There will be a series of consultations and I am very happy to discuss the timetable of the Bill, and any additions to it, in the open way that we have addressed this so far.
I am grateful to the noble Lord, Lord Hunt of Chesterton, for his support for the Coal Authority changes. As we have discussed in camera, the Bill presents a very good opportunity for us all.
The noble Baroness, Lady Smith of Basildon, asked how the 2.5 million households in appalling conditions could apply for the Green Deal. I am grateful that she explained the pathway whereby the ECO would have been a good way of doing that. Between us, over the next few weeks we need to develop a clear pathway on how that will happen. She reasonably asked why demand for cavity wall insulation is falling. The fact of the matter is that, over the past few years, a lot of simpler cavity walls have been filled and demand is therefore reducing. However, we are now moving into the territory of complicated cavity walls. I am also extremely grateful for her suggestion, which she has made previously, about smart meters. Clearly, we must insist on an industry objective of sharing the same set of common standards. The noble Baroness is absolutely right on that, and we will have developed the specifications by the summer of next year.
The Chief Whip would like me to bring my speech to a conclusion, as would I. Therefore, I am very happy to write on other points made by noble Lords. However, I should like just to mention that boilers can be included in the Green Deal, provided only that the expected savings meet the golden rule.
I want to reiterate that the Bill will bring energy efficiency to homes and businesses across the UK. This is an important Bill and, as I said earlier, despite one intervention, I am grateful for the advice that I have received from all sides of the House. I will continue to benefit from that advice as we discuss the Bill and take it through the House of Lords. It is exciting that the Bill should start in this House. I look forward to continuing these discussions in Committee—in or outside the Moses Room.
I should also like to thank my officials, Hansard—whose staff are incredibly tolerant in these matters—all the staff and all noble Lords and noble Baronesses for their support. I wish you all a very happy Christmas and, indeed, a prosperous new year.
Bill read a second time and committed to a Grand Committee.
Motion to Adjourn
Baroness Anelay of St Johns
My Lords, I should follow my noble friend’s enthusiasm for thanks, as it is appropriate to do at this time of year. It falls to me to move the Adjournment of the House for the Christmas break. It is traditional at this point for the Chief Whips and Convenors to reflect the views of Peers around the House and pay tribute to all the staff who have facilitated our work during the year.
It has been a memorable year for the House, not just for those of us who are addressing the House from a different vantage point on this occasion. Staff at all levels have had to prepare for the dissolution of Parliament and the general election, and then adapt to the formation of a coalition Government, the introduction of a new system of financial support for Members, and the appointment of two cohorts of new Members.
The professionalism and patience of our staff in responding to these changes has been consistently impressive—as indeed, always proves to be the case—and I am sure as Chief Whip that I speak on behalf of the whole House when I say that we are deeply indebted to them. We recognise that it has been a demanding time to be working in the House, but I hope that staff have found it engaging and perhaps exciting—sometimes, perhaps, too exciting.
I know that my opposite numbers in the other groups will in the course of their tributes single out individual members of staff who have completed, or are shortly due to complete, their long service to this House. There will be a separate occasion on which we will have the opportunity to pay tribute to our current Clerk of the Parliaments, Mr Pownall, and to our most recent Black Rod, Lieutenant-General Sir Freddie Viggers. That will take place in the New Year. However, the whole House will wish to join me in thanking both of them and all their teams for everything they have done with such quiet and professional fortitude throughout the year.
Whether I sit on the Benches opposite or here, I always feel that the Clerk of the Parliaments is my right-hand man. I pay tribute in particular on this occasion to the Yeoman Usher, who provided sterling support to the House so successfully pending the appointment of a successor to Black Rod. On this occasion I will single out one member of Black Rod's team, Jakki Perodeau, who retired at the end of May this year. She served as senior personal secretary to Black Rod and Clerk to the Lord Great Chamberlain for 10 years. In that time, she served three successive Black Rods: General Sir Edward Jones, Lieutenant-General Sir Michael Willcocks and, of course, Lieutenant-General Sir Freddie Viggers—Freddie to us all. She also assisted in arranging, among many historic events, the lying in state of the late Queen Mother. Prior to joining the House in 1999, Jakki had worked as personal assistant to Sir John Clark, the chairman of Plessey, and before that as personal assistant to Sir Norman Wisdom; what variety in a career. Her colleagues describe her as loyal and discreet, but also as a terrific events planner and unrivalled in her repertoire of anecdotes about the entertainment industry. We will have to ask for some more. She enjoyed the fast life, regularly accepting lifts to and from Hampshire from the Yeoman Usher at the beginning and end of the week, despite her firm disapproval of the speed at which he drives—watch out, Yeoman Usher, for the police. I am sure that all noble Lords will join me in thanking Jakki for her contribution to the House. All of us remember that warm and strong character and we wish her a long and happy retirement.
All that remains for me to do, until I formally move the Adjournment of the House, is to wish all staff and all noble Lords a restful and enjoyable Christmas Recess.
Lord Bassam of Brighton
My Lords, I, too, join the noble Baroness, Lady Anelay, in paying tribute to all the staff who work on our behalf, to colleagues who share our life and times on these Benches, and to the senior staff who will be departing, or have departed, for their support of our work. In particular, I refer to my left-hand man, the Clerk of the Parliaments, and I also thank the Yeoman Usher who, as the noble Baroness, Lady Anelay, said, has done a sterling job stepping in to the breach when Freddie Viggers was unfortunately taken unwell.
I also thank my opposite number, the noble Baroness, Lady Anelay. She has taken charge of your Lordships' House in a commanding fashion that does her great credit. Although from time to time we fall out, both formally and informally—that is our job—she does it with good grace and good humour. I pay tribute to her for the way in which she managed the transition when we left office and the coalition took office. It was handled with tact and diplomacy, and all the staff in my former office appreciated the way in which it was done. I am sure that I speak on behalf of the whole House, because the Chief Whip's function is a service to the House.
I pay tribute also to the noble Baroness, Lady D'Souza, for the way in which she, too, has managed the transition. The role of Convenor of the Cross-Benchers is not easy, and I am sure that all noble Lords would like to thank her very much for the important work that she does on our collective behalf.
I, too, have a couple of thanks to give to long-serving staff—in particular to Shirley Russell, who is one of two senior housekeepers who are standing down from their work. Shirley has worked as a housekeeper on the Committee Floor for her entire career in the House of Lords, which has spanned 20 years. For the past seven years, she has acted as team leader. I am told that during that time not a single complaint was ever received about the standard of the work in her area. She has undoubtedly been a larger-than-life character and is, I understand, affectionately known by the other Housekeepers as the “blond bombsite”. I can probably only get away with saying that at Christmas but there it is. She undoubtedly has a heart of gold and does everything and anything for anyone, despite grumbling loudly. It is no secret that she held a bit of a torch for the last but one Black Rod, Sir Michael Willcocks, who apparently gave a very good impression of enjoying having to run the gauntlet of her comments during the annual Christmas party for the Housekeepers, which takes place very early on a December morning. I should probably stop there in giving thanks to Shirley Russell, but there is no question in my mind that she has done a sterling job for all of us.
My second tribute is to Pauline Bartley, also a senior housekeeper. She has done great work in her service in the House of Lords. She joined the House on 1 July 1996 and has completed 14 years’ service. She was made a team leader some five years ago when Fielden House became available. Her older sister, Kathy, retired three years ago, so there is a strong family connection. She was working here when Pauline started and I think that that is how she got to hear of the vacancy—some things do not change. During her time here, she has worked in the area around the Chamber and the Galleries, and has taken part in every State Opening. She has worked in the Moses Room, assisting with the dressing of Peers in their robes and sewing on the odd button that, perhaps on some of our slightly stouter Members, has popped off from time to time. She has also been known to ensure that ribbons are correctly attached in an emergency.
Pauline is retiring on 10 February next year to look after her elderly mother, who is aged 97, along with her six sisters. I am told that it is a full-time job for all of them. They would rather do that than have a carer for their mother, and that speaks volumes for their concern and family commitment. Pauline is very proud of her time working in the House and apparently says that she has met some very interesting people, which I suppose must mean us. She will be very sorry to leave.
Finally, it falls to me to echo what has already been said. I wish everyone a very merry Christmas, with the emphasis on the “merry”, as I know it will be in my household. I hope that everyone enjoys themselves fully before they come back and enter the full fray of our busy legislative programme.
Lord Dholakia
My Lords, first, I endorse everything that has been said by my noble friend Lady Anelay and the noble Lord, Lord Bassam. It is right that we pay tribute to those who have served us so well. The media, including television, and the public never see the machinery that makes this House so effective. Behind everything that we do are the staff of the House of Lords, and this is our opportunity to say thank you for the services that they provide.
We each have the opportunity to single out individuals, and my job is to pay tribute to Ray Durrant. I have been told that Ray has sport in his DNA. He was very proud of the achievements of his footballer father, Fred, who was a great figure at Dover City, Brentford and QPR in the 1940s and 1950s. Had he played for my team and the team of the noble Lord, Lord Bassam, he would have seen that Brighton and Hove Albion is now at the top of the league.
Ray is a very good sportsman in his own right and was on the books at Kent County Cricket Club before finding his path blocked by a better player of the same age. Noble Lords will not be surprised if I name him: he was, unfortunately, “Deadly” Derek Underwood—arguably England’s greatest ever spin bowler.
At this time, when the England team is playing in Australia, we have the opportunity to thank all of our sportsmen, including our England team. Let us make sure that we teach the Aussies a lesson on cricket after the long time that we have had the Ashes in our hands.
It was a long career in the Civil Service before coming to the Lords which took Ray from Whitehall to Kosovo. He remains a keen golfer and will be very much missed by other members of the Parliamentary Golf Club. I am delighted to put that on the record and thank him and other colleagues who have given such sterling service to this Parliament.
Baroness D'Souza
My Lords, it is that extremely nice time of the year when it is a very welcome task to pay tribute to all the staff who have served us so well. I do so on behalf of the Cross-Benchers, from the lofty levels of the Lord Speaker, the Chairman of Committees, the acting Black Rod, and the Clerks, to the cleaners, and everyone in between. I extend heartfelt thanks for their support, particularly to the Cross-Benchers, during this time which, as has been said, has been somewhat difficult. There are a lot of new Peers, which is extremely welcome—it is now a very bustling House—but it is also rather difficult for the staff to have had to cope with putting names to a lot of new faces and making sure that they match. The people in catering services have had to feed many more mouths over the past few months, and have done so with great grace and cheerfulness.
I particularly single out the Doorkeepers and the Attendants, who have been consistently cheerful and patient, with wonderful memories, coping with very large Divisions taking a great deal longer than the prescribed eight minutes. It is astonishing to me how they manage to be so friendly and pleasant. I must come in and out of that door about 10 times a day, and each time, they say, “Hello”, “How are you?” and “Have a nice day”. I find that quite incredible. One does not get that on the outside. As I said before, the outside world is a bit of a shock after one has been in here for some time, because of the great deal of courtesy.
I have two retirees to whom I would like to pay tribute, both of them from the House of Lords Library, both of them with extremely long service. Colin Ross, who retired in September, has had 30 years in the Library, so will be familiar to many of your Lordships here. He was an IT whizz-kid with enormous technical knowledge and, therefore, very welcome in the Library and sadly missed—no doubt being replaced by someone who is about 12 years-old but equally good at IT. You know how the IT business goes. We understand that he is also a very keen skier, so perhaps he is also a very happy retiree this winter.
Then there is Glenn Dymond, who has 22 years in the House of Lords Library. He is not a whizz-kid at IT, but is a whizz-kid at law. He is known for his legal expertise and was highly valued by the Law Lords during his time, for whom he did a great deal of work over the years. He was also responsible for a number of the Library notes, which all of us over time will have discovered are the most excellent source of impartial information about Bills coming before this House. If anyone is not aware of them, I hereby give notice that they are ones to look at. In recent years, Glenn Dymond wrote authoritative works on the Parliament Acts, the appellate jurisdiction of the House of Lords and the creation of the Supreme Court, and the ceremony of House of Lords.
To those two retirees, we send enormously good wishes and hope that they will enjoy skiing. Glenn Dymond, as I understand it, enjoys Italy with his wife. His holiday home will now be of enormous benefit to him.
I end by extending my warmest thanks to staff—to colleagues, of course—but particularly to the staff of the House for all that they have done and wish everyone a very happy Christmas.